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An Inquiry Into The Imclone Cancer-Drug Story: Hearings
An Inquiry Into The Imclone Cancer-Drug Story: Hearings
STORY
HEARINGS
BEFORE THE
SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS
OF THE
(
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
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AN INQUIRY INTO THE IMCLONE CANCER-DRUG STORY
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AN INQUIRY INTO THE IMCLONE CANCER-DRUG
STORY
HEARINGS
BEFORE THE
SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS
OF THE
(
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
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COMMITTEE ON ENERGY AND COMMERCE
W.J. BILLY TAUZIN, Louisiana, Chairman
MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan
JOE BARTON, Texas HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia SHERROD BROWN, Ohio
RICHARD BURR, North Carolina BART GORDON, Tennessee
ED WHITFIELD, Kentucky PETER DEUTSCH, Florida
GREG GANSKE, Iowa BOBBY L. RUSH, Illinois
CHARLIE NORWOOD, Georgia ANNA G. ESHOO, California
BARBARA CUBIN, Wyoming BART STUPAK, Michigan
JOHN SHIMKUS, Illinois ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico TOM SAWYER, Ohio
JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland
CHARLES CHIP PICKERING, Mississippi GENE GREEN, Texas
VITO FOSSELLA, New York KAREN MCCARTHY, Missouri
ROY BLUNT, Missouri TED STRICKLAND, Ohio
TOM DAVIS, Virginia DIANA DEGETTE, Colorado
ED BRYANT, Tennessee THOMAS M. BARRETT, Wisconsin
ROBERT L. EHRLICH, Jr., Maryland BILL LUTHER, Minnesota
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania JANE HARMAN, California
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska
ERNIE FLETCHER, Kentucky
DAVID V. MARVENTANO, Staff Director
JAMES D. BARNETTE, General Counsel
REID P.F. STUNTZ, Minority Staff Director and Chief Counsel
(II)
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CONTENTS
Page
Hearings held:
June 13, 2002 .................................................................................................... 1
October 10, 2002 ............................................................................................... 215
Testimony of:
Crawford, Hon. Lester M., Deputy Commissioner, Food and Drug Admin-
istration ......................................................................................................... 227
Goldhammer, Robert F., Chairman of the Board, ImClone Systems, Inc .... 248
Keegan, Patricia, Deputy Division Director, Center for Biologics Evalua-
tion and Research, Office of Therapeutics Research and Review, Divi-
sion of Clinical Trial Design and Analysis, U.S. Food and Drug Admin-
istration; accompanied by Richard Pazdur, Director, Division of Oncol-
ogy Drug Products, Office of Drug Evaluation I, Center for Drug Eval-
uation and Research, U.S. Food and Drug Administration; Lee H. Pai-
Scherf, Medical Officer, Clinical Reviewer, Center for Biologics Evalua-
tion and Research, Office of Therapeutics Research and Review, Divi-
sion of Clinical Trial Design and Analysis, Oncology Branch, U.S. Food
and Drug Administration; George Q. Mills, Acting Chief, Team Leader,
Center for Biologics Evaluation and Research, Office of Therapeutics
Research and Review, Division of Clinical Trial Design and Analysis,
Oncology Branch, U.S. Food and Drug Administration; and Susan M.
Jerian, Medical Officer, Team Leader, Center for Biologics Evaluation
and Research, Division of Clinical Trials Design and Analysis, Oncology
Branch, U.S. Food and Drug Administration ............................................. 189
Kopperl, Paul B., Member of the Board of Directors, ImClone Systems,
Inc .................................................................................................................. 250
Landes, John, Senior Vice President, Legal, ImClone Systems, Inc ............ 257
Mendelsohn, John, Member of the Board of Directors, ImClone Systems,
Inc .................................................................................................................. 253
Papineau, Frank, Detailee, Committee on Energy and Commerce; and
Raymond Weiss, Consultant in Oncology, Clinical Professor of Medi-
cine, Lombardi Cancer Center ..................................................................... 18
Smaldone, Laurie, Senior Vice President, Global Regulatory Sciences,
Bristol-Myers Squibb Company ................................................................... 64
Vaczy, Catherine, Vice President, Legal, ImClone Systems, Inc .................. 258
Waksal, Samuel, former Chief Executive Officer, ImClone Systems, Inc .... 58
Waksal, Harlan, Chief Executive Officer, ImClone Systems, Inc.:
June 13, 2002 ............................................................................................. 61
October 10, 2002 ........................................................................................ 255
(III)
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AN INQUIRY INTO THE IMCLONE CANCER-
DRUG STORY
HOUSE OF REPRESENTATIVES,
COMMITTEE ON ENERGY AND COMMERCE,
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS,
Washington, DC.
The subcommittee met, pursuant to notice, at 9 a.m., in room
2123, Rayburn House Office Building, James C. Greenwood (chair-
man) presiding.
Members present: Representatives Greenwood, Bilirakis,
Stearns, Gillmor, Burr, Whitfield, Bass, Fletcher, Tauzin (ex offi-
cio), Stupak, DeGette, and Rush.
Staff present: Alan Slobodin, majority counsel; Mark Paoletta,
majority counsel; Tom Dilenge, majority counsel; Tony Cooke, ma-
jority counsel; Will Carty, legislative clerk; David Nelson, minority
investigator and economist; and Jessica McNiece, minority staff as-
sistant.
Mr. GREENWOOD. The subcommittee will come to order. It is the
Chairs intention to recess the subcommittee until 10:30 or 20 min-
utes after the conclusion of the full committee markup, whichever
is later. The Chair reminds witnesses who have received a sub-
poena that they remain subject to the committees compulsory proc-
ess. The committee stands in recess until 10:30 a.m. or 20 minutes
after the conclusion of the full committee markup, whichever is
later.
[Brief recess.]
Mr. GREENWOOD. The meeting will come to order. The Chair rec-
ognizes himself for an opening statement.
In the past, when Americans of my generation have thought
about the development of life-saving miracle drugs, the images
most likely to come to mind have been those of self-effacing men
of science, like Alexander Fleming and Jonas Salk. In 1952, when
Salk was convinced that he had developed a vaccine for the deadly
scourge of polio, he didnt rush out to the marketplace with effusive
praise either to the drugs efficacy or its money making possibilities.
Instead he vaccinated volunteers, including his wife and three sons.
And only when it became clear that even though the volunteers
had developed antibodies to the disease, none had become ill, did
he finally publish his findings the following year in the Journal of
the American Medical Association.
Now flash forward to 2001. Another doctor, this time with a
Ph.D. in immunology, claims that his company is bringing another
miracle drug to the market. Like Salk in 1952, the disease he is
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Gleevec and Herceptinthat doctors hoped would revolutionize cancer treatment
and would not cause the severe side effects of toxic chemotherapy.
They were assured by ImClone that Erbitux was going to be approved in early
2002. They believed in a company that had a number of leading oncologists on its
Board of Directors. They believed in a company that, in October 2001, had entered
into a much-publicized and record-setting $2 BILLION strategic agreement with a
leading pharmaceutical maker, Bristol-Myers Squibban agreement which included
an up-front $1 BILLION tender offer for ImClone stock from Bristol to ImClones
existing shareholders at the premium price of $70 a share.
On December 17, 2001, ImClone was one of seven biotechnology companies in-
cluded for the first time in the NASDAQ 100 index.
Excitement and confidence in ImClone was reflected in such media reports as a
December 26, 2001 Los Angeles Times story, which proclaimed, in almost giddy lan-
guage, that Erbitux, a colon cancer treatment from ImClone Systems Inc., is set
to make one of the biggest splashes of 2002.
Yet just days later, the hopes of cancer patients were crushed when they learned
that the deficiencies in the Erbitux clinical trials were so severe that FDA took the
rare action of issuing a refusal-to-file letter. This meant that, under the 60-day
deadline to determine whether a new product licensing application was adequate
enough to be evaluated, FDA found such serious deficiencies that the agency could
not even continue its review. After announcing FDAs refusal-to-file letter, ImClone
executives told investors and the public that the problem was simply some missing
documentation, and suggested that it was an easily fixable problem of supplying the
missing proof in the pivotal study. But soon thereafter, excerpts of the non-public,
FDA refusal-to-file letter appeared in a trade publication, revealing the real truth
behind the FDAs action: the clinical study problems were much more than a failure
to provide some data elements.
To bring the drug to market, ImClone would need to conduct additional studies
to demonstrate the drugs efficacy as a combination therapy for cancer, which would
take substantial amounts of time and could in fact raise more questions about
Erbitux than they would answer.
How did a highly-touted drug like Erbitux, which attracted the interest of Bristol/
Myers/Squibb to the tune of $2 billion, stumble so completely before even arriving
at the regulatory starting gate? Cancer patients and their families want to know.
And this Subcommittee Chairman wants to know.
Today, the Committees investigative detailee, accompanied by the Committees
scientific consultant, will present the preliminary staff report on this matter. Here
are some of the staffs key findings:
FDA refused to file ImClones application not just because of missing documenta-
tion and data discrepancies, but also because the pivotal study was neither ade-
quate nor sufficiently well-controlled to meet Federal requirements.
Yet, in an August 2000 meeting between ImClone and FDA to discuss this
study, ImClones proposed study design to support accelerated approval was
deemed by FDA to be probably acceptable.
FDAs decision to accept the protocol design in effect overruled the initial rec-
ommendation of the primary FDA medical reviewer, who argued it failed to
meet Federal requirements. Moreover, FDAs decision appears to be based on
a significant misunderstanding as to the rigor of the study protocola mis-
understanding that should have been quite apparent to ImClone from its discus-
sions with FDA, but one ImClone did not seek to correct. As FDA reviewers ex-
amined the study more closely in the context of ImClones formal licensing ap-
plication, these protocol design issues finally received the attention they de-
served, but by that point it was too late to turn backeither FDA accepted the
application for licensing, despite these flaws, or refused it and sent ImClone
back to the drawing board. As we all know, FDA chose the latter option.
Moreover, the due diligence performed by Bristol, and the examination by the
Committees scientific consultant, of ImClones pivotal study raise similar ques-
tions about whether Erbitux really works better in combination with another
drug, and whether Erbitux truly has a clinically meaningful effect on colorectal
cancer. I understand that ImClone and Bristol are planning to conduct addi-
tional studies on these issues and, for the sake of cancer patients, I wish them
well. But we now know that the promising response rates publicized by ImClone
based on this study do not appear nearly as promising as they once did, and
may in fact be clinically and statistically meaningless.
Before receiving the refusal-to-file letter on December 28, 2001, ImClone had re-
ceived signals from FDA as early as December 4th that a refusal-to-file letter
was a realistic possibility given the concerns FDA had about ImClones applica-
tion.
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Certainly by December 20th, after a phone call in which FDA told representatives
of ImClone and Bristol to no longer contact the agency until it sent a decision
letter on December 28th, both ImClone and Bristol believed that a refusal-to-
file letter was a probable result, according to interviews and records.
In fact, on December 25, 2001, Brian Markison from Bristol called Harlan Waksal
at ImClone to inform him that Bristol had confirmed from FDA that ImClone
would be getting a refusal-to-file letter. The next day, ImClone sent a letter to
FDA in an attempt to forestall the negative decision, and on December 27th,
Sam Waksal, ImClones CEO at the time, personally called FDA in an attempt
to stop the refusal-to-file letter. He was not successful.
Adding to the ImClone controversy, on that same day, December 27th, and per-
haps on December 28th as well, several family members and friends of Sam
Waksal sold significant volumes of shares of ImClone stockall prior to the
public announcement of the FDAs December 28th refusal-to-file letter. For ex-
ample, Sams daughter, Aliza (A-leeza), sold $2.5 million of stock while she was
on vacation. At the same time, Sam gifted to her twice the number of shares
she had sold. Incidentally, the amount of these gifted shares was the same as
the amount of shares that the SEC now alleges that Sam Waksal moved from
his own account, but was unable to trade these shares through Alizas account
because broker-dealers refused to execute the trades without approval by
ImClones counsel.
In another example, Martha Stewart, who had been a long-time investor in
ImClone and friend of Sam Waksal, sold all of what was left of her ImClone
holdings on December 27th. Phone records indicate a telephone call between
Ms. Stewart and Dr. Waksal on that same date.
Yesterday, the SEC charged Sam Waksal with illegal insider trading, alleging
that he alerted certain family members about the refusal-to-file letter before it be-
came public knowledge, who in turn sold large volumes of ImClone stock before the
market learned of the negative FDA action.
In addition to the stock trading activity in late December of last year, the Com-
mittees investigation also reviewed the purchase and sale of ImClone stock by
ImClones directors and top executives in the months leading up to the Bristol $1
billion tender offer, which was consummated in October 2001. On October 29, 2001,
two days before ImClone completed its application submission for Erbitux to FDA,
Sam and Harlan Waksal, the founders and top executives of ImClone, sold about
1.4 million shares of ImClone stock to Bristol for about $111 million. However, un-
like all the other ImClone shareholders who tendered shares to Bristol, the Waksals
were helped in part by loans of about $35 million that they received from ImClone
several months before, so that they could exercise their options to purchase ImClone
stock at highly discounted prices.
These findings, and other information contained in the staff report and in our wit-
nesses testimony, will be of great interest to the Subcommittee. One of our chief
concerns is assuring public confidence in our biotechnology/pharmaceutical industry
and the FDA process. When there is a suspicion that we are not getting all the facts
about a new drug, investment dries up and clinical trial enrollments stall. We must
look seriously at whether the secrecy of the FDA approval process can beor has
beenabused and exploited for personal gain, and whether useful drugs are delayed
because of flawed development strategies and internal FDA confusion.
The saga of failures like ImClone leads to a loss in confidence, not only in the
possibilities of the science, but in the firms that seek to bring new cures to market
and the public officials who must approve these cures and regulate these markets.
My hope is that the lessons we draw from this debacle will enable us to provide
improved direction to the companies, investors and the regulators who need to work
cooperatively and openly if we hope to continue to bring the promise of science to
the American people.
Mr. STUPAK. Thank you, Mr. Chairmanand also I think your
opening statement certainly reviewed the investigation done by our
respective staffs in this matter. I believe todays hearings raises a
number of issues of importance to the Food and Drug Administra-
tion, the manufacturers of new drugs and biologics, investors, large
and small, and most importantly the victims of cancer and their
loved ones.
The ImClone story is not a happy one. We still do not know if
Erbitux, a cancer drug developed by ImClone, will be a useful tool
in the fight against colorectal and other cancers. Only good and
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careful science, not anecdotal reports and certainly not inflated and
inaccurate hype, will answer this question.
Last spring and summer, patients and their doctors were led to
believe that a treatment for colorectal cancer, the second most
prevalent, and one of the most deadly, was at hand, when the truth
was that the drug had not been studied rigorously enough to deter-
mine what value Erbitux might have for the treatment of colorectal
or other cancers. Erbitux does show activity and may yet prove to
be another useful tool for some patients in the battle with a disease
that is extremely resistant to treatment.
ImClone was in a position to understand how unlikely FDA ap-
proval was based on a registration study and another single arm
study submitted last fall. But patients and oncologists were not in-
formed that the proposed registration study was so incomplete and
that despite six more months of trying, Bristol-Myers Squibb with
all their expertise and resources has still not completed the resid-
ual work necessary for resubmission to the FDA.
Investors had no idea that ImClone was submitting, at best, a
marginal application under an expedited procedure that must, and
demands, rigorous standards and the conduct and reporting of the
pivotal study and statistical power in the results. The ImClone ap-
plication was so defective and the results were so inconclusive that
any hope of an accelerated approval may have evaporated.
All this suggests that had the principals of ImClone decided that
they would do a better design and a much better executed study
instead of submitting a poorly designed and executed Phase II
study, then cancer patients, their loved ones and the oncologists
that treat them might have had Erbitux available this year.
Mr. Chairman, I believe that our respective staffs have done an
excellent job. I believe that the staff has framed the issues accu-
rately. I look forward to this hearing today. I look forward to an-
swering questions, and I appreciate the work our staffs have done,
and I think we owe them a great deal of gratitude bringing us up
to date. I know they have worked on this for a long time. So I am
ready to move on with this hearing. I will yield back the balance
of my time.
[The prepared statement of Hon. Bart Stupak follows:]
PREPARED STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF MICHIGAN
Todays hearing raises a number of issues of importance to the Food and Drug
Administration (FDA), the manufacturers of new drugs and biologics, investors large
and small and, most importantly, to the victims of cancer and their loved ones. The
ImClone story is not a happy one. We still do not know if Erbitux, the cancer drug
developed by ImClone will be a useful tool in the fight against colorectal and other
cancers. Only good and careful science, not anecdotal reports and certainly not in-
flated and inaccurate hype will answer that question.
Last Spring and Summer, patients and their doctors were led to believe that a
treatment for colorectal cancer, the second most prevalent and one of the most dead-
ly forms of that disease, was at hand when the truth was that the drug had not
been studied rigorously enough to determine what value it might have for the treat-
ment of colorectal or other cancers.
Erbitux does show activity and may yet prove to be another useful tool for some
patients in the battle with a disease that is extremely resistant to treatment.
ImClone was in a position to understand how unlikely FDA approval was based
on the registration study and another single arm study submitted last fall. But pa-
tients and oncologists were not informed that the proposed registration study was
so incomplete that despite six more months of trying, Bristol Meyers Squibb, with
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all their expertise and resources has still not completed the residual work necessary
for re-submission to FDA.
Investors had no idea that ImClone was submitting, to be generous, a marginal
application under an expedited procedure that must require rigor in the conduct and
reporting of the pivotal study and statistical power in the results. The ImClone ap-
plication was so defective and the results were so inconclusive that any hope of ac-
celerated approval has probably evaporated.
All of this suggests that had the principals of ImClone decided that they would
do a better designed and much better executed study instead of merely submitting
a poorly designed and executed Phase II study that they had on the shelf, the cancer
patients, their loved ones, and the oncologists that treat them, might have had
Erbitux available this year. Clearly, the sale of the company, not approval of the
drug, was the Waksal priority.
Mr. Chairman, I believe that this investigation has been conducted properly and
the staff has framed the questions accurately. I look forward to hearing the testi-
mony and the response to the many questions yet to be answered.
Mr. GREENWOOD. The Chair thanks the gentleman and recog-
nizes the chairman of the full committee, Mr. Tauzin.
Chairman TAUZIN. Thank you, Mr. Chairman. Mr. Chairman, I
want to commend you again and the staffs of both sides of our com-
mittee for the excellent work in investigating this extraordinary
story. The fact is that there are two stories here today. One of the
stories will be more fully told by the SEC and the Justice Depart-
ment as it examines how the FDA process and what appears to be
some rather amoristic players conspired in a way that allowed in-
sider trading to potentially occur and an awful lot of investors to
lose a lot of money while insiders were trading on information that
was available only to them in an attempt to cash out on what could
be, and what was promised to be, a very promising drug for cancer
patients.
The other story is about the process at FDA and how the FDA
process allowed this to happen. And that story has more to do with
cancer patients around America who lived with the hope, the ex-
pectation and the promise that Erbitux was everything it was
hyped up to be and that it would be available by spring, right now,
for cancer patients who are living only with this hope in mind, that
finally something had been developed that would extend their lives.
We were told, and Sam Waksal was one of those telling us, that
Erbitux, according to him, and I quote, is going to be huge. It is
going to be one of the biggest drugs in the history of oncology, a
drug that is going to alter the way that cancer therapy is done.
ImClone reported 400 calls a day from patients desperate to get
Erbitux outside of clinical trials. And every indication was that the
drug was not only everything it was promised to be but that it
would be available by this spring. And the story that unfolds in our
investigation is that while ImClone deserves a lot of credit over the
years of research into these monoclonal antibodies, which may yet
pay off 1 day for these patients, that the leadership of this com-
pany was apparently more intent on immediately cashing in on the
promise that Erbitux held out for the patients instead of being
carefully conscious of delivering on those promises sooner rather
than later.
Erbitux had some pretty big names behind it and had the giants
of the clinical oncology world on its board. It had John Mendelsohn
and Vincent DeVita. And we learned in this investigation that the
leadership of this company had total control over what information
would be released to the public, about its own studies and about
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the quality of this new product and about its potential since under
our rules FDA is prohibited and restricted under Federal law from
talking about such proprietary information. So we have a process
whereby FDA is being restricted on what it can say about the clin-
ical studies and about what is happening with this drug, while the
company can go out and hype it and take advantage of it finan-
cially, while at the same time, according to our investigation, recog-
nizing all the while that its studies were flawed and there were
problems with the FDA approval process.
Now that is the sad story. The saddest story is not about inves-
tors losing money or about the fact that some of these people are
facing now SEC and Justice Department investigations and, as we
have learned just recently, indictments. The sad thing is that our
investigation is opening the black box of the FDA process for public
review, and what we see is a drug development and FDA review
system that is not necessarily serving the best interest of Americas
people and its cancer victims in this case.
Now, our job, Mr. Chairman, is primarily to examine that proc-
ess, to see how this train wreck occurred and to see why the prom-
ise of a drug that could still hold such great hope for cancer pa-
tients was denied them because of a process that fell apart like
this; instead yielded only financial gains to people who took advan-
tage of it. If we end up with a process where drug approval strate-
gies dont work in the interest of our patients in America, but sim-
ply allow companies to hype their stock and personally enrich their
executives and shortchange their clinical research in the process,
and if we have an FDA that sort of hangs back while the company
falls on its face with such a high risk approval strategy, as was de-
veloped in this case, then it is not just the company who loses the
gamble, it is the American public who loses, and most importantly
the cancer patients who really by this spring, by now, were led to
believe that there was really something great on the horizon that
would be available now for them and give them life and hope.
Now, we have got to fix this system, and if your hearings point
the way for FDA and for us, we in the Congress, who have jurisdic-
tion in this area to make some changes to make sure this kind of
a train wreck doesnt happen again, we will leave it to the Justice
Department and the SEC to deal with the miscreants here, but we
ought to give cancer patients who are desperate for hope in a drug
like Erbitux a chance to have it really tested and proven out. And
if it is as good as some people think it is, that they have the advan-
tage of having it in the marketplace and available to them before
it is too late. And that is the task, that is the task of this com-
mittee, and I commend you for taking it on. I yield back.
[The prepared statement of Hon. W.J. Billy Tauzin follows:]
PREPARED STATEMENT OF HON. W.J. BILLY TAUZIN, CHAIRMAN, COMMITTEE ON
ENERGY AND COMMERCE
Thank you, Chairman Greenwood, and let me commend you for holding this hear-
ing on ImClone Systems and its much touted miracle cancer drug, Erbitux. We
have much to learn from the story of this drug. And I believe the story of this drug
provides an opportunity to examine the drug development and FDA review systems.
We need to make sure these systems work for patients.
Cancer patients and their families had great hopes that Erbitux would be on the
market by now. They and the media believed all that was asserted by ImClone and
its prominent backers. ImClones CEO, Sam Waksal, promised that Erbitux is
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11
going to be huge. It is going to be one of the biggest drugs in the history of oncol-
ogya drug that is going to alter the way cancer therapy is done.
Imagine what cancer patients thought when they heard that statement. ImClone
reportedly received 400 calls a day from patients desperate to get Erbitux outside
of clinical trials. By late last fallwhen ImClone filed its application with the
FDAthere were very sick colon cancer patients holding onto hope that Erbitux
would be on the market by this Springby now. But when ImClones clinical re-
search package was finally unveiled to the FDA, it had so many problems, the FDA
could not even review it.
ImClone certainly deserves credit for its years of research into monoclonal anti-
bodies, which still may pay off for patients in the future. Unfortunately, when the
company should have been paying more attention to the quality of its clinical trials,
its leadership appeared more intent on immediately cashing in on Erbituxs prom-
iseand delivering for cancer patients later, if ever.
ImClone had the selling points to boost its stock and raise the hopes of dying can-
cer patients. Erbitux is a targeted therapy, and targeted therapy is supposedly the
future of cancer treatment. It had the names, the giants of clinical oncology on its
boardJohn Mendelsohn, Vincent DeVita. It had a growing anti-cancer drug mar-
ket. And, most important, it had virtually total control over what information would
be released to the public about its studies since the FDA is restricted under Federal
law from talking about such proprietary information.
Yet it appears, as our Committee investigation has revealed, that ImClone was
so excited by preliminary response rates in very sick colon cancer patients, it tried
to take a mediocre clinical trial and gussy it up as a study worthy of an accelerated
approval by itself. But when it became crunch time to get FDA approval, the failure
of ImClones key executives to ensure the quality of its clinical trials collided with
the hype. And, all the while, ImClones insiders were lining their own pockets with
millions, as ImClones publicly-traded stock soared on false, public promises.
Now the SEC has alleged that Sam Waksal knew about the FDAs refusal-to-file
letter two days before it was issued and that he tipped off family members who sold
$10 million of ImClone stock. As Vee Kumar, a 47-year school psychologist and colon
cancer patient from Kirkland, Washington, told Vanity Fair magazine: There is no
excuse for raising patients hopes and then not delivering. Theres been a lot of talk
about ImClones monetary rewards from Erbitux, but not enough about getting it
to the patients who need it. They really ought to have done their homework better.
I understand that the preliminary Committee staff report reveals additional prob-
lems in the clinical package ImClone submitted to the FDA, and lays out the series
of actions by ImClone, its strategic partner Bristol-Myers Squibb, and FDA that led
to this debacle. This Committees investigation opens the black box of the FDA proc-
ess, and reveals a drug-development and FDA review system that is not serving the
interests of the American people.
Through this inquiry, I hope we can prevent such train wrecks in the future. Drug
companies and the FDA should develop drug approval strategies that work in the
patients interestnot so that companies can hype stock, personally enrich execu-
tives, and short-change clinical research; not so that the FDA hangs back while a
company falls on its face with a high-risk approval strategy, as if its just the com-
panys gamble. It may be the companys gamble, but if it fails, cancer patients are
the ones who really lose.
Mr. Chairman, I look forward to working with you to improve the drug develop-
ment system and to make that system really deliver for our sickest patients.
Mr. GREENWOOD. The Chair thanks the chairman and recognizes,
for 3 minutes for purposes of an opening statement, the gentlelady
from Colorado, Ms. DeGette.
Ms. DEGETTE. Thank you so much, Mr. Chairman. The case of
ImClone presents what seems to have become a parable for our
times: an upstart corporation with tremendous financial promise,
corporate executives reaping fantastic financial, soaring stock
prices, in this case up to $70 a share, a precipitous fall causing the
stock to plummet tenfold back down to $7, allegations of insider
trading by the officers of the company and their close friends. But
here is the difference here, and I agree but I disagree a little with
my chairman because I dont think it is a second story, I think it
is an interwoven story that relates directly to all the things I just
listed, and that is tens of thousands of cancer patients who are
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PREPARED STATEMENT OF HON. DIANA DEGETTE, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF COLORADO
The case of ImClone presents what seems to have become almost a parable for
our times:
An upstart corporation with tremendous financial promise;
Corporate executives reaping fantastic financial gains;
Soaring stock prices;
A precipitous fallcausing the stock to plummet ten-fold;
Allegations of insider trading by the officers of the company and their close
friends.
But heres the difference: Tens of thousands of cancer patients were hanging on
to the thread of a hope that Erbitux would be added to the two existing therapies
for deadly colo-rectal cancer. The foibles of the key players herecorporate execu-
tives, researchers, and FDA reviewers do not just result in tremendous financial
loses to investors, but devastated cancer patent hopes. Our job as I see it today, is
to examine how we can foster speedy approval of new drugs, especially in cases
where there are few alternatives, while ensuring their efficacy.
No where else in the world is there a greater confluence of pharmaceutical/biotech
industry growth, shareholder expectation of large profit margins, high hopes among
patients for new and innovative therapies and confidence among the American peo-
ple that the appropriate regulatory agency, the Food and Drug Administration is
providing the appropriate oversight.
To address at least two of these issues, quick approval of new and innovative
therapies and governmental oversight of the process, Congress established an accel-
erated approval process as part of the 1997 Food and Drug Administration Mod-
ernization Act (FDAMA), a comprehensive overhaul of the nations food, drug and
medical device laws.
The fast track approval process was created for getting therapies that dem-
onstrate the potential to help dying patients to the marketplace quickly. While the
fast track process bypasses the rigors of a large-scale phase III trial, it should not,
and must not, allow products to bypass rigorous and sound scientific review. Unfor-
tunately, there seems to be evidence that this is exactly what happened in the case
of Erbitux.
It appears as though too many people dropped the ball throughout the approval
process in this particular case. From the executives and scientists at Imclone who
designed the flawed clinical trials, to Bristol Myers Squibb, Imclones business part-
ner who was aware of the trials flaws including the too small sample size, and en-
rollment of patients who did not meet the eligibility criteria. From the Food and
Drug Administrations mishandling of the studys protocol design to the issuance of
the refusal to file letter, sloppy work abounded through this process.
I can assure you that my vote for passage of FDAMA was not made with the in-
tent of relaxing the rules, and Im sure my colleagues that sit here with me today
have the same sentiment. By no means did the 97 Act include a relaxation of any
of the rules. There was nothing in it that came close to subverting rigorous reviews
of the scientific merits of protocols.
However, what dismays me most is the impact that this case may have on other
therapies that will be seeking fast track approval in the future. Therapies that could
have the potential cure for millions of people, or even just extend their lives for an-
other day, a month, a year.
Like many of my colleagues, I receive hundreds of letters each year from constitu-
ents asking me to help facilitate quick FDA approval for the one therapy that might
be able to ease their pain, or extend their own, or a loved ones, life.
For instance, I have received letters from sufferers of diseases such as multiple
myeloma, an incurable form of blood cancer, who are desperate for Thalidomide, a
drug with a long history associated with birth defects. Just the other day I got a
letter from a constituent who suffers from irritable bowel syndrome pleading that
I do everything I can to facilitate the return of Lotrinex to the market.
I am very, very sympathetic to these people both as their elected representative,
and in my capacity as a public servant who votes on legislation that effects every
single person in this country. They are looking to us to facilitate the approval of
effective and safe medications. And for good reason. The United States has perhaps
the worlds most stringent standards for approving new drugs. We cannot shirk our
duty to take a long hard look at the approval process.
Mr. GREENWOOD. The Chair thanks the gentlelady and recog-
nizes for 3 minutes for an opening statement the gentleman from
Kentucky, Dr. Fletcher.
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Mr. FLETCHER. Thank you, Mr. Chairman. I think you have re-
viewed certainly the situation well. I appreciate very much you
holding this hearing. Your statements, as well as the chairman of
the full committee, certainly reflect my feelings. And in the interest
of time and moving on, I would like to submit my opening state-
ment to the committee, if that is okay.
Mr. GREENWOOD. The gentlemans statement will be made part
of the record.
[The prepared statement of Hon. Ernie Fletcher follows:]
PREPARED STATEMENT OF HON. ERNIE FLETCHER, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF OKLAHOMA
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Mr. Chairman, thank you for holding this hearing today. The United States is
foremost in the world today in biotechnological and pharmaceutical innovation. We
boast the leadership role in the world in new, lifesaving discoveries. For this, we
can thank many parties: capital-providing shareholders who fund the research; the
brilliant scientists and support staff of firms toiling at the bench to develop new
cures and treatments; the Food and Drug Administration regulators and approvers
who carefully examine submissions for accuracy and worthiness. When a drug is on
the FDA fast-track for approval because it may be patients last hope at a cure for
a life-threatening condition like cancer or AIDS, the proper functioning of the sys-
tem becomes all the more imperative.
For this system to work, there needs to exist complete honesty and integrity in
a companys operations. Yesterday (June 12), we learned that the CEO of the com-
pany visiting us today, Samuel Waksal of ImClone, evidently learned of the FDAs
negative decision on ImClones flagship drug undergoing approval, Erbitux. Accord-
ing to the Securities and Exchange Commission (SEC), Waksal and his relatives
sold greater than $10 million in Imclone stock in a period of 48 hours: on December
26 and December 27a day before the FDA released its refuse-to-file letter to
ImClone on December 28. Further, Dr. Waksals brother, Harlan, we learn, sold
roughly $50 million worth of shares on December 6, a day after FDA officials first
indicated a negative review of the application may be forthcoming. Further financial
improprieties are the fact that ImClone lent money to insiders through the exercise
of options based on ongoing, but not yet publicly disclosed, discussions with collabo-
rating pharmaceutical firm Bristol-Myers Squibb. As many of us have know, execu-
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16
tive compensation via options lacks clear and consistent definitions that potential
investors and lenders need to make solid decisions. Options are an exercise in cre-
ativity, in the place of quantifiable, sound accounting.
In addition to options, SEC lawsuit documents reveal that Dr. Sam Waksal was
carrying more than $80 million in debt at the time of the FDAs Erbitux announce-
ment. Could this have been another motive in quickly dumping his stock, leaving
the rest of the investors to hold the bag?
Shady executive practices lead to damaging effects rippling through the economy:
Integrity is the elixir that will attract capital and lead to lifesaving innovation, while
deceit is the poison that is eroding investor confidence.
This hearing today should open up all these processes and players for exploration
into whether the drug development and approval, including its financing, is occur-
ring as intended. Are the delicate balances between patient safety, shareholder re-
ward, and company incentive all aligned, or is the scale tipped too heavily in favor
one way or another, in need of adjusting? Is the exchange between necessary con-
fidentiality and public disclosure at an optimum?
That is why on this Committee are here today, in our investigative capacity and
responsibility to American citizens.
We are here to find out: What are the facts? What happened? What is supposed
to happen? What did the high-level executives and their cronies know and when?
If something went wrong, how can it be corrected to safeguard the balance I just
described among patients, the firm, and the shareholders? Let us fairly and open-
mindedly listen to our witnesses today, and thank you.
Mr. GREENWOOD. The Chair thanks the gentleman and recog-
nizes, for 3 minutes for an opening statement, the gentleman from
North Carolina, Mr. Burr.
Mr. BURR. Thank the Chair. And, clearly, the chairman has not
only tremendous interest in this, he has shown in the past tremen-
dous interest in the FDA process. The difficulty that we deal with
in this particular case is that many of us, years ago, saw the poten-
tial pitfalls of the emergence of biotechnology companies in this
country, that without a clear road map at the FDA as to how to
evaluate that industry, we saw the tendency of venture capital that
funded these companies that hadnt proved anything when they
emerged other than that they were creative and they thought they
might be on the track to a breakthrough, that with enough capital
and enough time that they might unlock that key to something
magical and eventually make it through an FDA process. We, in
1997, helped to make that process a little more predictable and we
thought a little more transparent. We learn with everything hear-
ing that it is not quite as clear as what we intended to be, and we,
as Members of Congress, have tremendous work left.
But I think that it is extremely important for us to never forget
this is about patience, that though we talk about publicly or pri-
vately held companies, in every case their quest is to come up with
a new compound that treats something that today is untreatable.
I am not sure the percentages today of efforts of the pharma-
ceutical or biologic world that actually come to fruition, but there
are many more paths that they go down that dont prove to be suc-
cessful, that never make it into the trial process where money is
invested, in good faith, money by that company, whether it is pub-
lic or private, because they believe that that might be the avenue
to unlocking the keythe key to unlocking the disease.
We are not here to judge the business decisions of any compa-
nies. Ours is to make sure that there is a process, a process that
not only the companies but the investors can have confidence in
works. I am hopeful, Mr. Chairman, that the FDA will be very hon-
est to us today as to how the protocols could have been flawed, how
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Thank you, Mr. Chairman. Prescription drugs are increasingly prevalent and in-
fluential on our health care system. With an ever-increasing number of drugs pend-
ing approval by the Food and Drug Administration, we cannot ignore the important,
time-consuming process that is involved in making a drug available to market.
In the case of Imclone Systems, alleged impropriety has taken place in its applica-
tion for approval of the cancer drug Erbitux. Although the drug has proven success-
ful in a variety of cases, questions over its consistency and a hastily prepared appli-
cation contributed to the FDAs rejection of this drug. That is why we are holding
this hearing today.
In the case of ImClone, however, the FDA has been criticized for its ruling. By
applying a more rigorous standard to Erbitux application, it has violated the spirit
of Fast Track approval. Furthermore, it has been alleged that ImClone CEO Sam-
uel Waksal had prior knowledge of the likely rejection of this drug from FDA em-
ployees, who are represented today. As a result, significant insider trading took
place just days before the final FDA ruling, enriching several Waksal family mem-
bers and other well-known shareholders. Although it is not in the purview of this
Committee to investigate such trading deals, it does fall under the jurisdiction of
the SEC and the Financial Services Committee, on which I do serve.
I will look forward to witness testimony today that will hopefully shed light on
the FDA approval process, as well as alleged impropriety by Imclone that has left
shareholders with substantial losses. Upon hearing testimony, I am confident that
this Committee will have a better idea on how to address and reform the operations
of the FDA for the 21st century.
Mr. GREENWOOD. The Chair will check and if it is profound, it
will be included in the record.
And with that, the Chair calls forward the first panel of wit-
nesses, and they are Dr. Frank Papineau, who is a detailee
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PREPARED STATEMENT OF FRANK PAPINEAU, COMMITTEE STAFF, COMMITTEE ON
ENERGY AND COMMERCE
Chairman Greenwood, Ranking Member Deutsch, and Members of the Sub-
committee, I am Frank Papineau, on detail to the Energy & Commerce Committees
staff. I am here today to provide you with background information and key facts
and dates surrounding the Food and Drug Administrations decision to end its con-
sideration of ImClone Systems highly touted cancer drug, Erbitux, and the ques-
tionable ImClone stock-selling activity during this turn of events.
My remarks are an oral summary taken from the Committee staff report prepared
for todays hearing. I am accompanied today by Dr. Raymond Weiss, Consultant in
Oncology and Clinical Professor of Medicine at Georgetown University Medical Cen-
ter. Dr. Weiss is under contract with the Committee to provide assistance to the
staff. Dr. Weiss wrote a report of his findings, which is appended to the Committee
staff report.
BACKGROUND
In early 2001, Bristol-Meyers Squibb (BMS) failed in its effort to form an alliance
with a biotech company, OSI, that it believed had a promising cancer drug. The
company believed it was losing its share of the oncology drug market and decided
to re-visit ImClone and its cancer drug Erbitux. On June 1, 2001, after a month of
negotiations, Sam Waksal outlined an acquisition plan that would give BMS a 70%
majority stake in ImClone. BMSs Board of Directors rejected the deal. Mr. Waksal
then told BMS that he was willing to consider alternative proposals provided they
include a significant equity investment in ImClone by BMS and he also advised
BMS that he believed ImClones existing stockholders would benefit most if BMS
acquired an equity interest through a tender offer to the ImClones existing stock-
holders.
During July 2001, after ImClone was virtually assured of the equity deal and in
anticipation of the tender offer from BMS ImClones Board agreed to lend $35.2 mil-
lion to the Waksal brothers and the Chairman of the Board. The loans provided the
opportunity for the three individuals to exercise stock options and warrants they
held to purchase a total of approximately 4.5 million shares of ImClone stock. (Sam
Waksal and Harlan Waksals loans were $18.2 and $15.7 respectively. The Chair-
mans loan was in the amount of $1.2 million.)
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On October 29, 2001, thousands of ImClones shareholders participated in the
BMS tender offer to purchase ImClone stock at $70 a share, a $20 premium over
the trading price. ImClones Board of Directors tendered 2.1 million shares to BMS
by themselvesrepresenting approximately 15% of the stock tendered by ImClone
shareholders to BMS. Sam and Harlan Waksal tendered 814,674 and 776,450
shares for about $111 million. Simply stated this means that the Waksal brothers
received more than 10% of the entire proceeds paid by BMS during the tender offer.
Although all ImClone shareholders were allowed to tender shares to BMS, only the
Waksals and two other board members borrowed millions of dollars of company
funds to purchase the stock and then tender it to BMS.
THE RTF LETTER
On December 28, 2001, the FDA issued its refuse-to-file (RTF) letter in response
to the ImClone submission. The RTF letter is sent in rare cases when a submission
is deemed insufficient. (It is a non-public document containing trade secret or con-
fidential commercial information.) In a December 31, 2001 conference call with in-
vestors, ImClone executives said that FDA sent the RTF letter because the Erbitux
application was missing certain train of documentation information needed by reg-
ulators to accept the filing. ImClone said it would be able to answer the FDA ques-
tions by the end of the first quarter, leading, hopefully to an approval of Erbitux
in the fall.
On January 4, 2002, the Cancer Letter published excerpts of the RTF letter indi-
cating thatcontrary to ImClone statements to investorsthe FDA had a long list
of concerns that went far beyond record keeping. The FDA believed ImClones clin-
ical trial was not adequate and well controlled and that additional studies would
be needed. The letter suggested that the FDA had warned ImClone starting in Au-
gust 2000 that its data would have to demonstrate that Irinotecan, the standard
chemotherapy mentioned above, was needed along with Erbitux. But the data sub-
mitted by ImClone was not sufficient to distinguish the effects of the two treat-
ments.
TRADING ACTIVITY BY IMCLONE EXECUTIVES AND OTHERS
Adding to the controversy over Erbitux has been the trading of ImClone stock by
ImClone insiders a few weeks before the FDA letter, as well as the trading of stock
by Waksal family relatives and friends during the 48 hours before the FDA letter
was issued.
On December 21, 2001, ImClone issued a Company order stopping its employees
from trading in ImClone stock until after the FDA decision on Erbitux was made
public. Committee staff believes that no board member or officer of ImClone traded
ImClone stock between December 21 and 28, 2001. However, staff found that, except
for Sam and Harlan Waksal, members of Sam Waksals immediate family sold
ImClone stock on December 27, 2001 or the next day hours before ImClone an-
nounced publicly that FDA had refused to accept the filing of Erbitux.
We found that three officers of ImClone sold stock prior to December 18, 2001 on
the advice of their broker. In addition, Harlan Waksal conducted a forward sale of
700,000 shares on December 6, 2001.
The staff learned that on October 31, 2001, Harlan Waksal notified the ImClone
Board Members that he planned to execute a 700,000 share stock transaction. He
told the board that the stock would still be under his voting control for the next
three years. He also stated that hed finalize transaction over the next two weeks.
He told Committee staff that in early November 2001 he attempted to shop the sale.
He told staff he was forced to sell the ImClone stock to come up with enough cash
to pay substantial taxes racked up from his prior exercise of stock options and his
tendering of shares to BMS. He also stated that because he didnt want to sell
shares he entered into a forward sales contract that gives him a percentage of the
cash value of the shares up front but still allows him to control the shares and defer
tax payments for another two years. In short, Waksal received less than what the
stock was worth at the time of the sale, but he also limited the downside risk when
ImClones stock price continued to drop. It should be noted that Harlan Waksal sold
the 700,000 shares on the same day that ImClone hit its 52-week high.
This ends my prepared testimony, and I will be pleased to answer your questions.
Mr. GREENWOOD. Thank you, Mr. Papineau. The Chair recog-
nizes himself for 5 minutes for questions, and let me address my
questions to you, Dr. Weiss. You are a clinical professor of Medi-
cine, is that right?
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for the trial. It was due to the mistake of the nurse data manager
overlooking the fact the patient was still on a drug that made him
ineligible. That is just pure human error. It happens 5, 6, 8 percent
of the time. It doesnt happen 27 percent of the time.
Mr. GREENWOOD. Okay. And so what does you extrapolate from
that with regard to the quality of the ImClone study?
Mr. WEISS. There are a lot of patients who were entered on the
trial that did not meet the eligibility criteria as set up in the pro-
tocol, and therefore that automatically makes the results somewhat
subject to question.
Mr. GREENWOOD. You also described as incredible the fact that
15 patients were exemptions to be enrolled in the study. What does
that mean and why is that incredible?
Mr. WEISS. Once you set up these eligibility criteria, you do not
deviate from them, except that you might make an error, as I just
described. You dont give exemptions from these eligibility criteria,
because if you do, then you have changed the patient population
that you are studying. You have allowed on patients who werent
eligible for the study.
Mr. GREENWOOD. So is it highly unusual for exemptions to be
given in such a study?
Mr. WEISS. Most certainly. In the Cancer and Leukemia Group
B, with the 300 participating institutions, the only time an exemp-
tion can be given is by the group Chair at the University of Chi-
cago. That means a phone call to the highest level, and that is
rarely done, No. 1, make a phone call, No. 2, even more rare is to
give the exemption.
Mr. GREENWOOD. Okay. I see in your report that you identified
another set of major deviations in the study which involve the dose
and the administration frequency of Irinotecan. Pronounce that for
me.
Mr. WEISS. Irinotecan.
Mr. GREENWOOD. Irinotecan, the toxic chem. drug used in com-
bination with Erbitux. How would the dosing and the frequency of
dosing affect the results of the study?
Mr. WEISS. The protocol set up a standard for giving that par-
ticular drug and said that the dose and the frequency had to be the
same as the patient received when they progressed; that is, their
cancer got worse when they were on that drug previously. When
they were treated on the protocol, I believe there were 17 patients
did not get the same dose and same schedule of frequency of treat-
ment as they were prior to entering. That is a major deviation.
Mr. GREENWOOD. How would you determine whether the patients
were actually improving because of these drugs?
Mr. WEISS. You couldnt separate the effect of increasing the dose
of the one drug from the effect of the combination of the two drugs,
either the Erbitux and/or the Irinotecan. When you are giving more
of one drug than you had before, you are changing the results, and,
again, you make the results of the study subject to question.
Mr. GREENWOOD. The Chairs time has expired. The Chair recog-
nizes the gentleman, Mr. Stupak, for inquiry for 5 minutes.
Mr. STUPAK. Thank you, Mr. Chairman.
Dr. Weiss, the patient eligibility, that was decided by who, the
patient eligibility for these studies?
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Mr. WEISS. They are set up in the protocol, and I assume the in-
vestigators entering the patient decided the patient met the eligi-
bility criteria or not. But in the case of those 15 patients, they
would have had to call somebody, perhaps at ImClone, I dont
know, to say it is okay to handle that patient even though they are
not eligible.
Mr. STUPAK. This study is known as 9923, correct?
Mr. WEISS. Yes, sir.
Mr. STUPAK. And the study was actually done in 1999, I believe.
Mr. WEISS. It was started in the end of 1999 and ended in early
2001.
Mr. STUPAK. And then after that August of 2000, ImClone and
FDA met to see if they could get an accelerated approval of this
drug, correct?
Mr. WEISS. Yes, sir.
Mr. STUPAK. Okay. After that meeting, there was a change in the
protocol, was there not?
Mr. WEISS. Actually, the change in the protocol anti-dated that
meeting by about 10 months. It was October 1999. And it is appar-
ent, to me anyway, that the FDA staff did not know about the
change in the protocol because their understanding was Version 1.0
of the study.
Mr. STUPAK. Correct. They thought it was Version 1.0, and in
fact when the approval was given on Fast Track, which was, if I
remember correctly, January 12, 2001, they were given the Fast
Track authority to do protocol No. 1, correct?
Mr. WEISS. Yes, sir. That is what it appears.
Mr. STUPAK. In fact, even 7 days there later, FDA, on January
19, actually sent them a letter and talked about the first protocol,
and that would be used in this Fast Track study.
Mr. WEISS. That is correct, sir.
Mr. STUPAK. Okay. If you go then tolet me back up just a little
bit. While they were doing this study and everything, there has
been a lot of discussion here about the July 30, 2001 Business
Week article, and in the Business Week article, which was touting
Erbitux, it stated that this drug was the furthest along of a hand-
ful of new cancer treatments that precisely honed in on a growth
signal found in up to 50 percent of all cancers. In clinical trials,
the drug demonstrated remarkable success in causing colon cancer
to regress in patients who had failed to respond to other treat-
ments. Did you find in your review any medical evidence that the
drug demonstrated remarkable success in causing colon cancer re-
gression?
Mr. WEISS. No, sir. The patients who got a response, that is their
cancer shrunk, the measurable lesions that were seen on a chest
x-ray or a CT scan, the percentage that got that sort of response
was in the 15 to 20 percent range. When you look at all of the peo-
ple who have reviewed these CT scans and decided that they
agreed, they agreed only on 20 patients and unfortunately there
were all these disagreements, whether the patients truly were re-
sistant to Irinotecan, No. 1
Mr. STUPAK. Sure.
Mr. WEISS. [continuing] and, No. 2, whether they truly got a re-
sponse to the protocol therapy.
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hype and what was being said, but there was nothing they could
do about it.
Mr. GREENWOOD. Time of the gentleman has expired. The Chair
recognizes the gentleman of the full committee, Mr. Tauzin, for 5
minutes for inquiry.
Chairman TAUZIN. Thank you, Mr. Chairman. Let me see if I can
get all this in sort of laymans understanding. Our understanding
from our investigation, gentlemen, is that this whole matter re-
volves around a mistake made in the early protocol that was based
upon the notion that the way to test this drug, Erbitux, was to test
it in combination with another toxic chemotherapy; is that correct?
Mr. WEISS. That is correct.
Chairman TAUZIN. And that mistake was based upon information
that Erbitux alone didnt show enough effect, didnt show a reason-
able amount of good results, that it had to be used in combination
and tested in combination with other toxic chemotherapy; is that
correct?
Mr. WEISS. Yes, sir. All drugs that go to clinical trials, whether
they are cancer drugs or anything else, go through testing in ani-
mals. And when they tested this new drug, Erbitux, in animals,
they found that they got the best results if they used Irinotecan
and Erbitux together in the animal cancers.
Chairman TAUZIN. Yes. But, apparently, when the FDA medical
reviewer handling this matter looked at it, the original decision
was that the protocol shouldnt be approved. And then in August
11, the senior FDA medical official, in effect, overruled the primary
review and said, Yes, go forward with it, based upon this com-
bination used; is that right?
Mr. WEISS. That is what it appears to be; yes, sir.
Chairman TAUZIN. And later on a single agent study indicated in
fact Erbitux did have enough activity to indicate that it should
have been studied by itself without studying it in combination with
the toxic chem. you mentioned; is that correct.
Mr. WEISS. Yes, sir. A single agent study was subsequently done.
Fifty-seven patients were entered and although six patients were
said to have responded, the Bristol reviewers said they clearly
agreed that five did respond. So that is about an 8 to 9 percent rate
of regression of the cancernumber of patients who got benefit.
Chairman TAUZIN. Now, the 9923 study, which was the study
that was used to approve the original protocol, apparently it had
lots of problems. When BMS, Bristol-Myers Squibb, did the inde-
pendent radiological review, they indicated that the response rate
was only 12.5 percent compared to the claimed 22.5 percent. They
found that the number of patients valuable under the system was
89 instead of the original 120. And if that data was correct, that
would drop it below the 15 percent clinical end point set by
ImClone, and the study would therefore be too small to support the
accelerated approval process. So BMS, in its radiological review,
ends up saying, Hey, this process, 9923, this protocol that the
FDA has approved, over the objections of the initial reviewer, is
flawed; is that right?
Mr. WEISS. Yes, sir.
Chairman TAUZIN. But they went ahead and invested anyhow
and went ahead with that deal. Now, in the end, the end result of
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all this was at some point, December something, FDA finally says,
This is not working. This review process is not doing its job, it is
flawed, and so we are going to recommend a so-called refusal-to-
file letter. Tell us what that is.
Mr. WEISS. That is basically a rejection
Chairman TAUZIN. It is a rejection notice.
Mr. WEISS. It just says, We are not going to review your study
because there are too many problems with it.
Chairman TAUZIN. Now, you have been asked to independently
review all this stuff, right?
Mr. WEISS. Yes, sir.
Chairman TAUZIN. The first question I want to ask you, if this
drug is as important as it was hyped to be, was this a caseif ever
there was a case that should have been handled absolutely care-
fully and correctly from Day One, wasnt this one?
Mr. WEISS. Yes, sir. Any time you have a study that is going to
the FDA to get approval for marketing so that thousands of pa-
tients into the indefinite future get the drug, you want to be sure
your scientific results and your study are iron clad.
Chairman TAUZIN. Yes, but more importantly, here is a drug that
is being hyped as a blockbuster chemical treatment drug. Here is
a drug that is being told it is going to revolutionize cancer treat-
ment. Here is a drug that by all accounts is life or death for hun-
dreds of patients who call in daily saying, Get it to me.
Mr. WEISS. That is correct.
Chairman TAUZIN. Isnt this the kind of drug that should have
been handled in the most careful, most precise, knowing ways so
that FDA was assured from Day One that the protocols were cor-
rect, that everybody working with FDA, including Bristol Myers
Squibb, everybody, should have been very careful that every T was
crossed, every I was dotted, everything was done precisely right be-
cause of the importance of the potential of this drug to cancer ther-
apy?
Mr. WEISS. Most assuredly.
Chairman TAUZIN. Now, you have looked at this process. Was
there any doubt in your mind that it was flawed when you looked
at it?
Mr. WEISS. The protocol had flaws in it.
Chairman TAUZIN. You could see it, couldnt you?
Mr. WEISS. Yes, sir.
Chairman TAUZIN. Why couldnt FDA? Why couldnt ImClone?
Why couldnt Bristol-Myers see it? Why couldnt somebody see it
early enough to say, Stop. Let us stop it right now and start it up
again correctly and do it right so that we dont delay this process
the way it has now been delayed.
Mr. WEISS. I dont believe I can answer that question, sir.
Chairman TAUZIN. That is the question I think we have got to
answer, Mr. Chairman. Thank you.
Mr. GREENWOOD. The Chair thanks the chairman and recognizes,
for 5 minutes for inquiry, the gentlelady from Colorado, Ms.
DeGette.
Ms. DEGETTE. Thank you, Mr. Chairman, and following up on
Chairman Tauzins question, the way the Fast Track process is
supposed to work is if you have a promising drug, but you want
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tered, that was a problem. And then the loosenessand I use that
term as my ownthe looseness of the directions on what dose of
Irinotecan would be prescribed. It was stated that you give the
same dose as they received before they went on study with no dose
increase, but, obviously, the physicians involved went ahead and
did that anyway. And that makes the results very suspect. Did the
patient respond because they got the two drugs together or did
they respond because they got more of the Irinotecan now than
they did before.
Mr. FLETCHER. And I can certainly understand how that makes
the results somewhat uninterpretable. Let me ask you, in this com-
pany you have substantial expertise on the board at ImClone, you
have obviously substantial expertise in the FDA. How does this
study, first off, get structured with these flaws, how does it get im-
plemented with these flaws in conjunction with the FDA, and this
allowed to go on? Could you help us with some insight on that?
Mr. WEISS. I cant answer that question, sir. One of the board of
directors is somebody I used to work under at the National Cancer
Institute, Dr. DeVita, whom I highly respect, and I dont know
whether he actually saw the protocol or not.
Mr. FLETCHER. I find it, and the reason I do, certainly, many
families, and I know our familys been affected personally with
metastatic colon cancer, and I remember when the studies came
out with 5-fu and Lamisil, we were very optimistic and it was ap-
parently helpful, and we looked forward to this medication or oth-
ers like this in not only metastatic colon cancer advance but other
diseases. And if there is ever a time that you need to make sure
for the timeliness of the availability of this drug that a study is
done well, a study is conducted properly, that there is proper FDA
oversight, that our Fast Track procedures were followed that were
established by Congress, I mean this is the time you want it, be-
cause there is nothing more disheartening to raise the expectations
of thousands of cancer patients that there is a new medication on
the horizon and then to find out that it may still be, I mean it may
still be a very good, effective medication, but the delay due to the
flaws, and it looks like problems on both the companies and par-
ticularly with the FDA as well in overseeing the study, and maybe
summon the process where a company can release and talk about
how good this drug is and where the FDA, even if they have con-
cerns, are prohibited, rightfully so, from talking about that. I would
just like your discussion on what do you see can be done to prevent
this in the future that we are not doing?
Mr. WEISS. I agree with you entirely that it was extremely unfor-
tunate that the hopes of many patients with cancer were raised
and somewhat dashed now by the fact that the study wasnt inter-
pretable sufficiently to approve the drug for marketing. I honestly
dont have an answer to the second part of your question, what can
we do to change things. One of them is perhaps allow the FDA a
little more latitude to make some of their analyses public. I think
that is for Congress to decide, though.
Mr. FLETCHER. I see my time has expired, and thank you, Mr.
Chairman.
Mr. GREENWOOD. The Chair thanks the gentleman. The Chair
wishes to make one correction with regard to the testimony given
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cant amount of that drug, 12 weeks of therapy and prove that their
cancer grew despite that therapy. The protocol was changed that
the patient could have had only a few doses, like on one patient
as few as four. And that is 4 weeks of therapy, not 12 weeks. And
you dont have sufficient information from just 4 weeks of therapy
that the drug didnt work and the patient should now go on the
study. That was the major change.
Mr. STEARNS. Thank you, Mr. Chairman.
Mr. GREENWOOD. The Chair thanks the gentleman and recog-
nizes for 5 minutes the gentleman from North Carolina, Mr. Burr.
Mr. BURR. I thank the Chair. Dr. Weiss, you said that it was
the protocol was small and this was unusual. Is it unusual for a
drug under Fast Track to have a small protocol?
Mr. WEISS. No, it is not. A hundred and twenty patients should
be sufficient if you truly have reliable results and you really see
a benefit of the treatment.
Mr. BURR. How many Fast Track processes have you testified on?
Mr. WEISS. I have never done this before.
Mr. BURR. And how many Fast Track processes have you re-
viewed as a medical professional?
Mr. WEISS. I have not had any experience at the FDA reviewing
such things.
Mr. BURR. But you testify a lot because you are good. Is your
consulting role to review things and potentially file a report on it?
Mr. WEISS. Yes. I both practice medical oncology, take care of pa-
tients, and I act in this role of quality assurance for the clinical
trials that the National Cancer Institute supports.
Mr. BURR. How many Fast Track trials to date have used com-
bination drugs in a Fast Track application?
Mr. WEISS. I have not reviewed any Fast Track applications, sir.
I never worked for the FDA.
Mr. BURR. Yes, sir. I understand that, I am just trying to make
sure the familiarity with the Fast Track process. But in fact this
is the first time there has ever been a Fast Track process that used
combination drugs. And in every case of the participants, they had
to have already had a traditional chemotherapy approach that they
had been non-responsive to; am I correct?
Mr. WEISS. Yes. I think that is true. I cant think of
Mr. BURR. My understanding is that is true, and do we know in
how many cases the particular drug
Mr. WEISS. Irinotecan.
Mr. BURR. [continuing] Irinotecan was used?
Mr. WEISS. There is the original studies with that drug con-
ducted back in the early to middle 1990s that allowed that drug
to be approved for marketing.
Mr. BURR. And if I understand correctly from the notes I have
got, Dr. Leonard Saltz, of the Memorial Sloan-Kettering Center,
was intricately involved in the 9923 process?
Mr. WEISS. Yes. I know him and I hold him in high regard.
Mr. BURR. And what did he say when we interviewed him about
these?
Mr. WEISS. I dont believe we did interview him, sir.
Mr. BURR. Oh, we didnt interview him, okay. And there were 27
clinical sites that participated in 9923 trial, am I correct?
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Mr. WEISS. I am not sure. I would have to provide that for the
record.
Mr. BURR. But it was a number of them. Did we talk to any of
them relative to the discrepancies, the flaws
Mr. WEISS. No, we didnt. We did not go out and interview any
of the original investigators.
Mr. BURR. I am just trying to better understandas a Member
of Congress, and I may be the only one, I dont think I am, I get
calls all the time from patients who have gone through the tradi-
tional mode and they have been non-responsive. And they pick up
the phone and they call and they say, Can you find a clinical trial?
Can you get me in something? I can sort of understand how people
snuck into this. I am not sure who approved it, whether it was one
of the clinical sites or whether it was somebody at the FDA, maybe
somebody changed the guidance a little bit. Certainly, the numbers
that you talk about that you found are disturbing, and I think they
do, to some degree, question the results that were found. I think
that it is real important that we understand better from those 27
clinical sites what transpired. How did we have the contamination
of the pool? But I think to suggest that it was flawed because it
was small is in fact because it was a Fast Track application, and
I think that there is some degree of history to prove that that is
the case usually when we have it.
Let me ask you, Dr. Weiss, if the pool of individuals who partici-
pated in this trial was clean, in other words the fit within the pa-
rameters, as you understand them, that were agreed to by the FDA
and ImClone, would the results then, if they were the same per-
centages that you see today, increase or decrease your belief that
there was something here that we ought to really pursue, as it re-
lates to the colorectal cancer?
Mr. WEISS. It would increase it. The problems are, as I said, we
dont know about the fact that there were so many ineligible pa-
tients, why that occurred. We know that some of the patients got
a higher dose of Irinotecan than they should have, and we also
know that there is a good deal of disparity between the various ra-
diologists reviewing the CT scans to decide whether or not the pa-
tient got a response. But if everything were pure, then I can tell
you it would be a very interesting drug. I dont know that I would
call it a breakthrough, but it would be very interesting.
Mr. BURR. I purposely did not refer to it as a breakthrough and
never try to on this committee to refer to anything as a break-
through, other than when we actually pass a bill, because usually
that is a breakthrough.
I think it is extremely important, though, that we understand
better these 27 sites and why they made the decisions to either
lower or raise the level of the chemotherapy drug that they were
using in combination, because in fact by itself Erbitux showed some
response but not tremendous response. It showed a much better re-
sponse when used in combination withwhat was the name of that
chem. drug again?
Mr. WEISS. Irinotecan.
Mr. BURR. Irinotecan. But in the case of every person in the trial,
they had gone through a traditional chemotherapy approach and
had been non-responsive; in other words, their problem had not
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To review the above issues, Committee staff conducted hundreds of hours of inter-
views with officials from ImClone, BMS, and other pharmaceutical companies, FDA,
Wall Street firms, patient advocacy groups, oncologists, and representatives of fam-
ily and friends of Sam and Harlan Waksal. Staff also obtained and reviewed thou-
sands of documents from the above officials, corporations, and FDA. These docu-
ments and discussions with officials included, but were not limited to, the FDA drug
approval process, clinical trials, the BMS tender offer and milestone payments with
ImClone, events leading up to the FDA refusal-to-file letter, stock trading by
ImClone officials and Waksal family and friends, and ImClones filings with the Se-
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39
curities and Exchange Commission (SEC). Staff also reviewed the due diligence ac-
tivities conducted by seven other major pharmaceutical firms during 1999 and 2000,
to determine what they learned about ImClone and its products, and what their ra-
tionale was for not entering into an alliance with ImClone, as BMS did in 2001.
THE FDA PROCESS: ACCELERATED APPROVAL AND FAST-TRACK DESIGNATION
The ImClone case highlights the policy question of how to test cancer drugs in
a way that balances rapid access to life-saving drugs with the need to ensure that
the drugs work, particularly when a publicly traded company is involved. In the
standard approval process for a drug, FDA normally requires one or more large clin-
ical trials (usually called Phase III trials) showing that a drug prolongs life com-
pared with a placebo or with an already-approved drug. Such trials can take years,
involve thousands of patients, and cost hundreds of millions of dollars to perform.
When a company develops a drug for patients with life-threatening diseases and
there are comparatively few treatment options available, FDA sometimes approves
the new drug based on smaller trials, without a control group for comparison. The
trials normally look at whether tumors are shrinking, which can be determined
much faster than whether patients are living longer. Often, these trials are limited
to patients who have not responded to existing therapies (known in medical terms
as refractory patients). If FDA approves a drug based on such small trials, it typi-
cally requires companies to conduct additional studies to show more widespread
benefit, such as additional survival time.
In ImClones case, the company was trying to get approval for Erbitux based on
a study where the drug was used in combination with an approved chemotherapy,
in a universe of approximately 120 patientsa very small patient pool. ImClones
strategy appears to have been unprecedented. According to the BMS Due Diligence
Findings, dated June 12, 2001: No accelerated approval has ever been granted for
an oncology drug for use in a combination therapy. It also should be noted that
ImClone was seeking FDAs agreement for accelerated approval with a protocol de-
sign of a study that already had been conducted.1
The Committees investigation focused on two areas of the FDA process prior to
the submission of ImClones BLA for Erbitux in October 2001: (1) the clinical pro-
tocol design and conduct of the pivotal 9923 study, and (2) the single-agent study
of Erbitux.
In the spring of 2000, ImClone had two Phase II clinical trials that looked prom-
ising for accelerated approval: a study in head-and-neck patients, and a study in
colorectal cancer patients. ImClone originally anticipated that it would be the head-
and-neck trial that would be the vehicle for possible FDA approval. However, be-
cause of faster accrual of patients and promising results, it was the colorectal cancer
patient study, known as the 9923 study, that ultimately formed the clinical core of
ImClones BLA. According to ImClone, the results of the 9923 study showed a 22.5%
positive response rate in colorectal cancer patients who already failed the standard
chemotherapies.
In August 2000, ImClone was scheduled to meet with FDA to discuss, among
other things, whether the results of the 9923 study were clinically meaningful and
whether 9923 could meet accelerated approval criteria and receive fast-track des-
ignation. Prior to the ImClone meeting, FDA officials held an internal pre-meeting
to prepare. At this pre-meeting, the primary FDA medical review officer indicated
her reservations concerning the 9923 study. Her notes from this meeting state: 1)
Is ORR [overall response rate] = 15% clinically meaningful for colorectal CPT-11
failure? Only if as a single agent. 2) CP02-9923 meet accel. approval criteria and
fast track? No. According to Committee staff interviews, nobody on the FDA staff
expressed disagreement with the assessment of the medical review officer at this
internal pre-meeting.
On August 11, 2000, FDA met with ImClone officials and consultants to discuss
ImClones accelerated approval strategy using the 9923 study. According to the min-
utes of this meeting prepared by FDA, FDA participants described the 9923 study
during this meeting as follows:
This is a Phase 2 open label study of Cetuximab [Erbitux] plus irinotecan
in metastatic or recurrent colorectal cancer refractory to irinotecan. Following
two courses of irinotecan, patients tumors are measured and based on the re-
1 Some companies meet with FDA before they conduct the clinical trial to seek the agencys
input and guidance on the clinical protocol design. Agreements between the company and FDA
can be made binding through Special Protocol Assessments. Although FDAs Center for Drugs
has used dozens of these assessments for cancer drugs, the FDAs Center for Biologics (the divi-
sion handling ImClone) had never used one for a biologic product, other than in one instance
involving a vaccine.
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sults, divided into the Stable Disease Treatment Group (tumor volume change
< 25%) or the Progressive Disease Treatment Group (tumor > increased in vol-
ume 25%). Patients then receive irinotecan plus cetuximab until treatment fail-
ure.
This description accurately tracks the first version of ImClones protocol for 9923.
According to that August 2, 1999 Version 1.0 of Protocol IMCL CP02-9923, Section
3.1.2, the patient must have demonstrated progression of disease after completing
a minimum of two courses of a regimen containing irinotecan. However, a few
months later, when patients were being enrolled into the study, ImClone relaxed the
inclusion criteria in an amended protocol. According to the October 18, 1999 Version
2.0 of Protocol IMCL CP02-9923 amended Section 3.1.2 (Inclusion Criteria), the pa-
tient has documented stable disease (must have received a minimum of 12 weeks
of irinotecan therapy) or progressive disease at any time after receiving an
irinotecan-containing regimen. Copies of scans must be provided to confirm the lack
of an objective response to prior therapy. (Emphasis added).
Therefore, FDA was relying on an outdated version of the protocol at the August
2000 meeting with ImClone. Yet nobody from ImClone informed FDA about the
amended protocol at this meeting or any time thereafter. Moreover, the minutes of
the meeting taken by the company and FDA were exchanged, yet, again, the com-
pany did not correct the FDAs misunderstanding on this point.
At the August 11, 2000 meeting with ImClone, the most senior FDA medical offi-
cer agreed that the basic trial design is probably acceptable,albeit, relying on
the incorrect version of the study protocoland, in effect, overruled the view of the
primary medical reviewer that had been expressed at the pre-meeting among FDA
personnel. The senior FDA officer told Committee staff that her decision to accept
the protocol was based on her belief that she should be flexible for a promising drug
meeting an unmet medical need, but was also based on representations that
ImClone made about the special synergistic effect of Erbitux when used in combina-
tion with irinotecan. The senior FDA officer said that ImClone asserted that Erbitux
showed no activity when used alone, which would support the claim of synergistic
effect. This assertion was based on animal data and one small human trial. In the
context that ImClone discussed this point, she assumed the human trial involved
human colorectal cancer patients. The senior FDA officer later learned that the
human trial involved renal cancer patients, which cannot be used as a basis for de-
termining single-agent activity in colorectal cancer patients. ImClone disputes that
the issue of single-agent activity came up at the August 11, 2000 meeting, but the
company agrees that the issue was discussed in subsequent phone calls and meet-
ings with FDA.
On January 12, 2001, FDA granted fast-track designation for Erbitux. The FDA
fast-track designation appears to be based on the inclusion criteria of the outdated
version of the 9923 protocol. According to the January 12, 2001 letter to Nikhil
Mehta of ImClone from Glen Jones of FDA: [W]e are designating as a Fast Track
development program the investigation of cetuximab in combination with irinotecan
for its effect on durable tumor responses (complete and partial responses) in pa-
tients with metastatic colon cancer who are refractory to standard chemotherapy (5
fluorouracil and irinotecan), where refractory is defined as progressive disease during
at least two cycles of standard doses of 5-fluorouracil and irinotecan. (Emphasis
added).
On January 19, 2001, FDA sent a letter to ImClone requiring them to conduct
a small study of 25-50 patients to test the response rate when using Erbitux alone
as opposed to being used in combination with the toxic Irinotecan. As FDA ex-
plained:
You are expected to study and submit the following in order to have a bio-
logics license application which meets filling criteria and in order for your devel-
opment program to continue to meet the criteria for Fast Track designation:
1. Preclinical and clinical data (including at least 25-50 patients) which excludes
the possibility (e.g., through establishment of the upper limit of the 95% con-
fidence interval around the observed response rate and the lower limit of the
95% confidence interval around the observed response rate with combination
therapy) that the response rate observed with the combination of irinotecan
and Cetuximab [Erbitux] would not be observed with single agent Cetuximab
at the dose and schedule proposed. You must provide evidence that continu-
ation of a toxic agent (irinotecan) is necessary to achieve the desired clinical
effect. If you do not have such data, you should generate this information in
a randomized controlled trial directly comparing the efficacy of single agent
Cetuximab (the generic name for Erbitux) to the combination of Cetuximab
plus irinotecan to establish the contribution of irinotecan in this setting.
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During the winter and spring of 2001, while conducting the single-agent study,
ImClone was actively pursuing a joint venture or a sale of the company, or of a ma-
jority interest in the company, to several pharmaceutical companies. It appears that,
in pursuing such an arrangement, the ImClone leadership attempted to downplay
the significance of the single-agent study required by FDA. For example, according
to one drug company officials e-mail, dated April 6, 2001:
They [Imclone] have to complete the pilot trial of C225 [Erbitux] alone in re-
fractory colon cancer patients, 25-40 patients. The FDA has required a final
study report from this trial prior to an ODAC [Oncologic Drug Advisory Com-
mittee] meeting. Per [ImClone] estimately [sic], they believe a final study report
will be sent Oct/Nov, meaning a likely Spring ODAC meeting. According to
Harlen [reference to Harlan Waksal], the FDA has agreed that while this study
is necessary for filing, it will not impact the approval of the combination in re-
fractory. They need to have the single agent activity per their regulations. They
wont use the small trial to compare RR [response rate] of the single agent to
the combo, but will use it to help plan further development of C225 as a single
agent if appropriate.
On October 12, 2001, ImClone finished its single-agent study. The results of this
study showed six responses out of 57 patients, for a response rate of 10.5%. As FDA
noted in its December 28, 2001 refusal-to-file letter: Based on the summary infor-
mation provided, and assuming that the results can be confirmed, the data do not
show that the response rate observed with the combination of Cetuximab and
irinotecan could not also be observed with single agent Cetuximab at the dose and
schedule proposed.
Even though there was a difference in the response rates (10.5% single agent;
22.5% combination), because both studies had such small populations, the con-
fidence intervals overlapped and, thus, there was still a possibility that a very sick
colorectal cancer patient could respond just as well with Erbitux alone as with
Erbitux combined with a toxic chemotherapy. As a result, additional studies would
be needed to isolate and establish the contributions of each drug. These additional
studies would, at a minimum, significantly delay the launch of Erbitux.
However, it appears that ImClone attempted to portray the results of the single-
agent study and the prospects for its application in an inaccurate light to BMS, its
likely new business partner. According to an October 12, 2001 e-mail from BMS
Chief Scientific Officer Peter Ringrose to other BMS executives: I just had Sam
Waksal on the phone re the single-agent data. Apparently it came out at 13% which
he feels is half the C225 plus CPT-11 data. They have informed the FDA who were
pleased and confirmed that they would be on for the Feb 28 ODAC (FDAs Onco-
logic Drugs Advisory Committee). He reckons they will be on the market by March.
I am planning to meet with Sam in NY week after next.
But, according to Committee staff interviews with FDA personnel, no one at FDA
spoke to ImClone about the single-agent data on or around October 12, 2001, and
FDA had never placed Erbitux on the agenda for the February 2002 ODAC meeting.
The submission of the single-agent study to FDA was not completed until December
4, 2001.
To more closely evaluate these two studies relied upon by ImClone, the Com-
mittee hired an expert consultant to review the studies designs, protocols, and re-
sults. The key findings from this review are contained in a Report to the House
Committee on Energy and Commerce by Raymond Weiss, MD, FACP (attached as
an appendix to this report).
THE FILING OF THE ERBITUX APPLICATION AND FDAS REVIEW
On October 31, 2001, ImClone completed its BLA application for Erbitux by sub-
mitting the clinical portion of the BLA to FDA. This clinical portion included the
records for the 9923 study and the single-agent study 0141 (except for data on 17
patients, which was submitted on December 4, 2001). Under the fast-track designa-
tion of the FDA Modernization Act of 1997, the agency was required to complete
its review of Erbitux and determine filability within 60 days of the submission date.
Until this submission, FDA had relied on assurances from ImClone and the records
in ImClones Investigative New Drug file. FDA did not actually see the details of
the clinical trials for Erbitux until ImClone submitted this portion of its BLA at the
end of October 2001. Upon reviewing the clinical portion, FDA reviewers imme-
diately identified significant problems, and the number of problems continued to
mount as their review continued in November 2001. According to the FDA review-
ers, the Erbitux application, as filed, raised serious questions and lacked needed in-
formation that ImClone had been advised on several occasions would be required
as part of the application. The FDA reviewers told Committee staff that it was read-
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42
ily apparent that the clinical research was severely deficient and could not meet the
legal requirement of an adequate and well-controlled clinical trial.
On November 30, 2001, key FDA reviewers reached the conclusion that problems
in the clinical portion were so severe that there was no option but to issue a refusal-
to-file (RTF) letter, a rare event. On December 4, 2001, after raising the prospect
of an RTF in a conversation with one of the FDA reviewers, ImClones Regulatory
Affairs Vice President formed an impression for the first time that an RTF letter
was a realistic possibility, according to her interview with Committee staff. That
same day, she reported this conversation and FDAs concerns to Dr. Harlan Waksal.
On December 5, 2001, FDA management decided ImClone would receive an RTF let-
ter. On December 7, 2001, a BMS Regulatory Affairs executive reported that she
was not sure ImClone fully understood the implications of the comments of a FDA
medical reviewer regarding the individual contributions of the drugs in the combina-
tion trial. In the e-mail opinion of the BMS executive, based on the FDA reviewer
comments, a refusal to file decision doesnt appear altogether unlikely at this
point.
Both FDA and officials from the two companies told Committee staff that the tone
of conversations between the agency and ImClone dramatically changed following
the early December discussions with FDA. By mid-December 2001, it was clear to
both ImClone and BMS that FDA had serious concerns about the Erbitux drug ap-
plication. After a teleconference with FDA on December 12, 2001, key ImClone ex-
ecutives perceived an increased probability of an RTF letter, according to their
interviews with Committee staff. On December 20, 2001, FDA told ImClone and
BMS to no longer contact the agency until after they received FDAs letter on
filability on December 28, 2001. Some personnel from ImClone and BMS thought
from the tone of this conversation that an RTF letter was likely, but some in
ImClone still held out hope for a positive FDA response. On December 24, 2001, an
outside consultant for BMS was able to get an incidental confirmation from a source
at FDA that FDA would be sending an RTF letter to ImClone. The next day, Decem-
ber 25, BMS Senior Vice President for Marketing Brian Markison called Dr. Harlan
Waksal, who was vacationing in Colorado, to inform him of this confirmation BMS
consultant had received from an FDA source. Dr. Sam Waksal was vacationing at
a Caribbean island and returned to New York on December 26, 2001.
It appears that Sam and Harlan Waksal and other key ImClone and BMS execu-
tives knew about the RTF letter by the morning of December 26, 2001. That day,
ImClone sent a letter to FDA in an attempt to prevent the RTF by offering to waive
its rights to the 60-day deadline that FDA had to meet by December 28, 2001. FDA
declined the offer on the grounds that ImClone could not legally waive the deadline.
On December 27, 2001, Sam Waksal for the first time personally interacted with
FDA with respect to Erbitux, calling a senior official at FDAs Center for Biologics
he knew when Waksal worked at the National Institutes of Health. The purpose of
this call appears clear. Based on internal notes produced to the Committee by
ImClone, dated 12:00 noon on December 27, 2001, Sam and Harlan [Waksal] are
calling FDA to try to stop RTF. The senior FDA official declined to intercede, and
on December 28, 2001, at approximately 2:55 p.m., FDA faxed the RTF letter to
ImClone. The company in turn publicly revealed the receipt of the letter later that
day, at approximately 7:14 p.m.
THE RTF LETTER AND SUBSEQUENT EVENTS
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irinotecan, a standard chemotherapy, was needed along with Erbitux. But the data
submitted by ImClone was not sufficient to distinguish the effects of irinotecan and
Erbitux. After the Cancer Letter report appeared, ImClone shares fell sharply fur-
ther, to open on January 7, 2002, at $34.96 per share.
On January 9, 2002, after ImClone had lost nearly $1.5 billion in market value
since December 28, 2001, and after the filing of at least 11 federal class action law-
suits, Sam Waksal, ImClones president and chief executive officer, attempted to ex-
plain the companys situation at the J.P. Morgan H&Q Healthcare conference.
What happened was that we put together a faulty package and we screwed up,
Waksal reportedly said. The principal problem, he said, was the companys failure
to provide documentation demonstrating that the patients enrolled in ImClones piv-
otal trial had met the eligibility criteria.
THE BMS-IMCLONE PARTNERSHIP AND IMCLONES LOANS TO KEY OFFICIALS
During 1999 and 2000, ImClone invited BMS, as well as several other major phar-
maceutical firms, to meet with representatives of ImClone to conduct due diligence
with a view toward acquiring a majority ownership in ImClone. Over this time pe-
riod, several pharmaceutical firms, including BMS, met with Sam Waksal and con-
ducted preliminary due diligence activities. Each pharmaceutical firm, including
BMS, concluded that the price being asked by ImClone was too high to continue dis-
cussions at that time.
In early 2001, BMS conducted an extensive internal review of its own biologics
business, and evaluated a number of opportunities to expand its biologics capabili-
ties. BMS concluded in April 2001 that ImClones IMC-C225 compound, Erbitux,
could sustain its leadership position in oncology, significantly contribute to its cor-
porate growth strategy, and provide a significant step towards BMS becoming a
leader in biologics.
In mid-April 2001, Mr. Brian Markison, BMS Senior Vice President of Marketing,
contacted Dr. Sam Waksal to determine whether ImClone would be interested in
pursuing a deal involving a significant equity investment in ImClone by BMS. On
May 3, 2001, Dr. Waksal, Mr. Markison and Dr. Peter Ringrose, Chief Scientific Of-
ficer of BMS, met in New York City to discuss BMS interest in ImClone. During
that meeting, Dr. Waksal outlined the type of deal that would be acceptable to
ImClone. Dr. Waksals preference was that ImClone remain a publicly traded entity
after the deal. As a result, Mr. Markison agreed to explore a possible transaction
whereby BMS would acquire a majority interest of ImClone in return for BMS com-
mon stock, together with a separate agreement providing for the commercial rights
to IMC-C225 by BMS.
After further discussions, on May 19, 2001, the two companies entered into a con-
fidentiality agreement, and BMS conducted further due diligence of ImClone. On
June 1, 2001, Mr. Richard Lane, President of BMS Worldwide Pharmaceutical Divi-
sion, and Dr. Waksal met to discuss an outline of a deal prepared by ImClones legal
advisors that called for an acquisition by BMS of a 70% stake in ImClone.
On June 5, 2001, BMS Board of Directors entertained the majority ownership
deal with ImClone. However, some BMS board members raised concerns about ac-
quiring majority ownership of ImClone, and suggested that BMS seek an arrange-
ment of less equity in ImClone while still securing the rights to C-225. On June 7,
2001, representatives of the two companies met to discuss BMS proposed due dili-
gence activities. Shortly thereafter, employees of BMS and representatives of its
legal and financial advisors conducted an extensive due diligence review of ImClone
in the areas of clinical development, legal matters, information technology, mar-
keting and sales, tax, finance, manufacturing, intellectual property and regulatory
affairs.
In late June 2001, BMS concluded that the acquisition of a minority interest in
ImClone, together with a separate commercial agreement relating to the co-develop-
ment, co-promotion, and distribution of ImClones IMC-C225 compound, would be a
preferable structure for a deal with ImClone. Thereafter, Dr. Waksal was contacted
by Mr. Peter Dolan, Chief Executive Officer of BMS, and Mr. Lane, who confirmed
to Dr. Waksal that BMS no longer had interest in a deal to acquire a majority inter-
est in ImClone where ImClone remained a publicly-traded entity. Mr. Dolan and
Mr. Lane reaffirmed BMS interest in ImClone and BMS intent to consider other
deals that met the economic and business objectives of both companies. Dr. Waksal
stated that he was willing to consider alternative proposals, but emphasized that
he was not interested in a commercial transaction that did not also include a signifi-
cant equity investment in ImClone by BMS. Dr. Waksal also advised BMS that he
felt ImClones existing stockholders would benefit most if BMS acquired an equity
interest through a tender offer to ImClones existing stockholders.
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On June 26, 2001, BMS provided ImClone with an outline of a proposed commer-
cial transaction for the co-development, co-promotion, and distribution of IMC-C225,
and an equity structure that proposed an acquisition of a 19.9% interest in ImClone
by BMS. During the end of June and the first two weeks of July 2001, BMS and
ImClone, and their respective legal and financial advisors, met several times to dis-
cuss terms and conditions of a 19.9% equity investment and a commercial trans-
action relating to rights to IMC-C225. Also during this time, the two companies and
their respective financial advisors discussed the price at which BMS would offer to
purchase the ImClone shares, which would be at a significant premium to the pub-
licly-traded stock price.
In mid-July 2001after ImClone was virtually assured of the 19.9% equity deal
and in anticipation of the lucrative tender offer from BMSImClones Board of Di-
rectors agreed to lend $35 million to Sam and Harlan Waksal and Robert
Goldhammer, the Chairman of the Board, to provide them with an opportunity to
exercise stock options and warrants they held to purchase a total of approximately
4.5 million shares of ImClone stock. Sam Waksal and Harlan Waksals loans were
$18.2 million and $15.7 million respectively. Mr. Goldhammers loan was in the
amount of $1.2 million. These unsecured loans were at an interest rate equal to the
prime lending rate plus 1 percent (7.75 percent on the date of the note).
On July 20, 2001, BMS and ImClone agreed, on a preliminary basis, to a tender
offer price of $70.00 per share. On September 17, 2001, the Board of Directors of
BMS unanimously approved the ImClone deal. On September 19, 2001, ImClones
Board of Directors approved the deal, and both companies issued separate press re-
leases announcing that BMS would acquire 14.4 million shares, or about a 20 per-
cent stake, of ImClones common stock for $1 billion through a tender offer of $70
a share, exclusively set aside for ImClone shareholders. At the time of the an-
nouncement, ImClone shares were selling at roughly $40 per share. BMS also
agreed to pay as much as another $1 billion in milestone payments in return for
the marketing rights to Erbitux in the United States.
On October 29, 2001, thousands of ImClones shareholders participated in the
BMS tender offer to purchase ImClone stock at $70 a share, a $20 premium over
the increased trading price. Sam Waksal sold 814,674 shares, and Harlan Waksal
sold 776,450 shares, or just more than 20% of each of their holdings. Although all
ImClone shareholders were allowed to tender their shares of ImClone stock to BMS,
only the Waksals, the Chairman of the Board, and one other board member were
given loans by ImClone to purchase ImClone stock, at highly discounted prices, and
then tender it to BMS at $70 per share.
A number of experts in the financial and biotech areas told Committee staff that
there is no precedent in pharmaceutical-biotech alliances for the BMS and ImClone
deal, which resulted in the immediate personal enrichment of top executives
through a tender offer to existing shareholders. The more typical alliance formed be-
tween a major pharmaceutical company and a smaller biotech firm is centered on
milestone payments that provide much needed cash to the biotech firm.
BRISTOL-MYERS SQUIBB DUE DILIGENCE OF IMCLONE
The Committees investigation also focused on BMS due diligence into the clinical
research behind Erbitux prior to its decision to strike a commercial deal with
ImClone. In May 2001, BMS scientists were mobilized to examine the clinical re-
search package. On June 14, 2001, BMS Senior Vice President Laurie Smaldone
sent an e-mail to her colleagues Peter Ringrose and Beth Seidenberg concerning
ImClone, stating: On the whole this remains a very high risk opportunity. Among
the critical outstanding issues she cited:
Pivotal CRC [colorectal cancer] program issuesSingle agent activity. The
trial which is ongoing will need to be shared with us. We should attend the
FDA meeting with ICE [ImClone] when the data is final. There is no agreement
that we could find that is reassuring regarding activity level needed for ap-
proval.
Weak dose selection rationaleThey have developed a PK [pharmacokinetic]
rationale for dose selection, however the dose is questionable for refractory pa-
tients and the safety margin for early stage patients has not been determined.
In their phase 3 first line study they are evaluating the same dose used in re-
fractory disease. This is already seen as a problem by the FDA and by us . . .
SafetyThe safety of the product, specifically related to skin toxicity, bleed-
ing, allergy has not been well characterized. This reemphasizes the weakness
of the dose selection argument . . .
Ultimately, concerns about the single-agent study and the 9923 study were not
completely resolved before BMS entered into the agreement with ImClone. In a
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June 12, 2001 Summary of Key Findings, BMS executives pointed out the risks
of the results of the single-agent study:
FDA has requested that data be provided on the antitumor activity of C225
as a single agent. Preclinical data has thus far been provided to FDA to address
this issue, but they have persisted in their interest that clinical data be pro-
vided. No accelerated approval has ever been granted for an oncology drug for
use in a combination therapy. (emphasis added). In the event that tumor re-
sponses are observed in the ongoing single-arm single agent refractory
colorectal study then it is possible that this could throw into question the ap-
provability of the combination claim based on nonrandomized antitumor data
(given that the value of CPT-11 after CPT-11 might be questioned).
On September 4, 2001, a BMS Vice President sent an e-mail to other senior BMS
executives, stating:
Based on todays discussions with Susan and Steve our preliminary rec-
ommendation is a go decision. We are still trying to obtain data from the mono
therapy study from ICE [ImClone]. As of 6:30 PM today we did not have any
more information. I will be discussing this with Susan again in the AM.
Despite requests to BMS, Committee staff has not been provided any evidence at
this time that shows that BMS obtained the data on the single-agent study prior
to making its historic deal with ImClone.
In addition, the BMS independent radiology review of ImClone 9923 study low-
ered the ImClone reported response rate and the size of the patient pool, both sig-
nificantly. In an August 30, 2001 e-mail, the BMS independent radiologist noted:
Attached to this message you will find the latest update of the spread sheet
we are using to keep track of our review of the CTs and MRIs of patients en-
rolled in CP02-9923.
We are in the process of reviewing a total of 34 cases, 27 of which were ini-
tially assigned by the investigator to the PD [progressive disease] cohort and
7 of which were assigned to the SD [stable disease] cohort. To date we have re-
viewed 23/27 cases from the PD cohort and 6/7 cases from the SD cohort.
In the PD cohort we can now confirm 14 partial responses. We may have 15,
but one case will require adjudication. With 4 more cases to review, and the
one case for adjudication, the RR in the PD cohort could be as high as 15 +
4/120 = 15.8%.
I should mention, however, that in 4 of these confirmed partial responses our
radiologists have judged the disease to be only stable at the time of patients
enrollment into the study. If these 4 cases were thrown out, then the highest
possible response rate would 11 + 4/120 = 12.5%. However, we have not con-
ducted a strict review of all of the 120 cases, and it is likely that if we carefully
reviewed all of the cases we would throw many out on the same basis [emphasis
added]. Indeed, it is my understanding that the study sponsor has conducted
such an analysis on the basis of its own radiologists review, and has thereby
reduced the denominator of the patient population with radiographically con-
firmed progressive disease.
I will review the study sponsors data and see if I can get at the same de-
nominator [patient pool size] as it did (? N = 89), and calculate the response
rate accordingly. More cases and analysis to follow tomorrow...
It should be noted that, if indeed the denominator in 9923 was below 100 (particu-
larly if it were as low as 89, which the BMS independent radiologist appears to have
indicated in the above e-mail), the entire study probably could no longer serve to
support an accelerated approval application. As ImClone consultant, Roger Cohen
MD, e-mailed to Dr. Harlan Waksal on January 4, 2002:
9923 is a small study to begin with. It cannot get much smaller and have
any hope of serving as a registration study. I think it is clear that it has to
have at least 100 fully eligible and evaluable subjects (closer to 100).
Therefore, although BMS received tentative support from its scientific leadership
and outside consultants, it appears that the status of crucial issues were as follows
at the time BMS entered into the alliance with ImClone in September 2001:
1. Single agent activityBMS lacked the data from the single agent study.
2. Response rateBMS outside radiology review indicated that a strict review could
lower the response rate below the clinically meaningful standard of 15 percent.
3. The denominator, or patient pool size, of the pivotal trial appeared to be under
100, and therefore could not serve as a basis for accelerated approval according
to ImClones own consultant.
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BMS REACTION TO IMCLONE COMMENTS ON THE REFUSAL-TO-FILE LETTER
On the evening of December 28, 2001, ImClone revealed to the public that it had
received a refusal-to-file letter from FDA. On December 29, 2001, a Reuters news
article reported: Sam Waksal, ImClones chief executive officer, told Reuters that
the agency first wants more annotation information, about how the company
verified that patients enrolled in its trials had indeed failed previous drug regimens
and that subsequent tumor reductions attributed to Erbitux were indeed real. Con-
cerns raised by the FDA mainly involve how the data were presented and do not
raise outright concerns about safety or efficacy of the drug, the CEO added. An in-
ternal BMS e-mail dated December 30, 2001, responding to earlier BMS e-mails on
the Reuters article, states: I agree that some alot [sic] of Sams comments are mis-
leading and at this point we should continue to be silent. As you heard from yester-
days discussion, theres a lot we dont know.
On that same date, December 30, 2001, another BMS official commented on the
draft documents being prepared for the ImClone investor relations conference call:
These draft documents leave me most uncomfortable. They gloss over the serious-
ness of the RTF letter and make it appear that the integrity of the study results
is not in question, when in fact it is . . . We will also need to rewrite major portions
of the clinical and pharmacology part of the BLA including a new 9923 study report,
new 141 (monotherapy) study report, new ISS and ISE based on these revised re-
ports. I know that this is not what ImClone wants to tell their investors, but I think
it represents the reality of this situation.
TRADING ACTIVITY OF SAM AND HARLAN WAKSAL, THEIR FAMILY MEMBERS AND CLOSE
FRIENDS, AND IMCLONE DIRECTORS
Adding to the controversy over Erbitux has been the trading of ImClone stock by
ImClone insiders a few weeks before the FDA refusal-to-file letter, and by Waksal
family relatives and friends during the 48 hours before the FDA letter was issued.
Committee staff examined public records and conducted interviews with Sam and
Harlan Waksal, and with representatives of several of their family members and
friends, to determine the degree of trading in ImClone stock by these individuals
over the last year. Of particular interest were board members who tendered stock
to BMS on October 29, 2001, and whether any board members or officers of ImClone
sold stock during the critical month of December 2001. Committee staff also at-
tempted to gather information on those trades of Sam Waksals immediate family
members and close friends that were identified during discussions with Dr. Waksal.
Committee staff found that ImClone board members exercised stock options to ac-
quire 8.1 million shares of ImClone common stock between the period of June 1,
2001 and October 29, 2001. Committee staff examined this time period because it
represents the period of negotiations between BMS and ImClone officials regarding
an equity purchase of ImClone by BMS. Of these 8.1 million ImClone shares, Sam
and Harlan Waksal acquired approximately 4.1 million. Each board member who
exercised stock options during this time period is shown in the table below.
ImClone Incorporated Stock Options Exercised by ImClone Board Members During the Period of
Negotiations with BMS
June 1 Through October 29, 2001
Options
ImClone Board Members Date Exercised Shares excercised at
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47
It should be noted that ImClone awarded many of these options to the Waksal
brothers in 1999 and 2000, and accelerated the vesting of these options with the
rise in the stock price. According to ImClones SEC filings, on May 24, 1999, the
stockholders approved the grant of an option to Sam Waksal to purchase 1,000,000
shares and Harlan Waksal to purchase 650,00 shares of Common Stock at a per
share exercise price equal to $18.25, the last reported sale price of the Common
Stock on the date shareholderapproval was obtained at the annual shareholders
meeting. The option was to vest no later than six years from the grant date and
specified amounts were subject to earlier vesting if specified Company Common
Stock price thresholds were met. On May 31, 2000, the stockholders approved
amendments to a total of 1,600,000 options that were granted to Sam and Harlan
Waksal the year before. The shareholders also approved amendments to a total of
3,300,000 additional options held by Sam and Harlan Waksal. All these options
were amended to provide that each tranche vested immediately upon achievement
of the relevant stock target price associated with such tranche, without regard to
the passage of time that was a requirement in the original options. The options be-
came fully vested and exercisable upon the approval of the amendments. As re-
ported in a previous section, the ImClone board granted the Waksal brothers and
two other directors company loans to finance the exercise of their options as part
of the tender offer.
In total, Committee staff found that members of ImClones Board of Directors ten-
dered 2.1 million shares of ImClone common stock at $70 a share to BMS on Octo-
ber 29, 2001. This represents approximately 15% of the stock tendered by ImClone
shareholders to BMS. Sam and Harlan Waksal tendered a total of 1.6 million shares
of ImClone stock to BMS for about $111 million. Simply stated, this means that the
Waksal brothers received over 10 percent of the entire proceeds paid by BMS during
the $1 billion tender offer, and the ImClone Board combined received nearly 15 per-
cent of the proceeds from the BMS tender offer. The table below shows the number
of shares tendered and the proceeds for each of ImClones Board members.
Committee staff also examined trading by ImClone board members and officers
during the critical month of December 2001 to determine if any ImClone officials
who sold stock had knowledge of discussions with FDA regarding whether the agen-
cy would accept the Erbitux filing. We found that, with the exception of Harlan
Waksals disposition of 700,000 shares on December 6, 2001 (discussed below), three
officers of ImClone sold stock prior to December 18, 2001. In each case, Committee
staff were told that the officials involved were unaware of the details of the FDA
review of Erbitux, sold less than 20 percent of their holdings in ImClone, and did
so based on their brokers advice. Even though ImClone has internal rules that re-
quire officers of the company to receive pre-clearance before trading in company
stock, two of the three trades were not pre-cleared. In one case, the individual was
not an officer at the time of the trade, but was since promoted. In the other case,
the officer claimed to have simply forgot to pre-clear the trade.
On December 21, 2001, ImClone issued an order prohibiting its employees from
trading in ImClone stock until after the FDA decision on Erbitux was made public.
ImClone has told Committee staff that no board member or officer of ImClone trad-
ed ImClone stock between December 21 and 28, 2001. However, Committee staff
discovered that several of Sam Waksals immediate family members or friends sold
ImClone stock on December 27, 2001the day before ImClone announced publicly
that FDA had refused to accept the filing of Erbitux. This list of traders included
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48
his father, sister, two daughters, and son-in-law. In addition, Committee staff
learned from discussions with Sam Waksal that the SEC has questioned him about
trades made by three other friends on December 27 or 28, 2001.
With the exception of Sam Waksals father (who has not yet provided information
to the Committee), attorneys for each of the family members admitted that their cli-
ent sold stock on or around December 27, 2001, but asserted that they received no
non-public information about ImClone and each had a reason why they sold the
stock on that particular day. Although phone records and logs obtained from Sam
and Harlan Waksal, covering the time period December 26-28, 2001, suggest that
both men had conversations with each other and may have had conversations with
members of their family and friends, both Sam and Harlan Waksal denied that they
had tipped off anyone as to their knowledge that ImClone was about to receive a
RTF letter from FDA.
On December 6, 2001, Harlan Waksal sold 700,000 shares of ImClone stock. On
October 31, 2001, Harlan Waksal notified the ImClone board members that he
planned to execute a forward transaction involving 700,000 shares of ImClone com-
mon stock:
Dear Members of the Board:
As a result of my recent option exercise and the sale of stock to Bristol-Myers
Squibb I am left with an additional tax burden that I need to meet. As I am
averse to having such a great personal liability I plan to meet this obligation
(and provide some liquidity), by the sale of additional shares of ImClone stock.
I am moving to do this through a prepaid forward contract for the sale of stock.
This will be a 700,000 share transaction, the stock will still be under my voting
control for the next three years and I will retain some continued upside if the
stock continues to perform as we anticipate. I plan on finalizing this transaction
over the next two weeks.
I look forward to seeing you at the Board dinner on the 14th.
Sincerely,
Harlan W. Waksal, M.D.
Dr. Harlan Waksal told Committee staff that, in November 2001, he attempted
to shop the sale of his ImClone stock. Dr. Waksal filed a Form 144 with the SEC,
announcing his intention to sell 700,000 shares of ImClone. Dr. Waksal told Com-
mittee staff he was forced to sell the ImClone stock to come up with enough cash
to pay substantial taxes generated from his prior exercise of stock options and his
tendering of shares to BMS. He also stated that, because he did not want to sell
shares, he entered into a forward sales contract that gave him a percentage of the
cash value of the shares up front but still allowed him to control the shares and
defer tax payments for another two years. Simply put, Dr. Waksal received less
than what the stock was worth at the time of the sale, but he also limited his down-
side risk when ImClones stock price dropped considerably in the month thereafter.
It should be noted that Dr. Waksal sold the 700,000 shares on the same day that
ImClones share price hit its 52-week high.
Moreover, in February 2002, Dr. Sam Waksal revealed about 50 unreported stock
trades that should have been reported to the SEC and returned to ImClone about
$486,000 in profit he made on some sales of company stock because he may have
violated an insider-trading regulation.
CONCLUSION
The key findings from the Committee staffs investigation at this point are as fol-
lows:
In August 2000, the primary FDA medical reviewer handling the ImClone/Erbitux
matter did not believe that ImClones 9923 study met the criteria for acceler-
ated approval and fast-track designation. Her view is substantiated by the opin-
ions of leading oncology experts who reviewed the 9923 protocol for the Cancer
Letter in 2002 and found serious protocol design flaws.
At the August 11, 2000 meeting between ImClone and FDA to discuss a possible
accelerated approval strategy, FDA relied on the wrong version of the 9923 pro-
tocol, which had a tighter inclusion criteria than the one actually used in the
amended protocol. ImClone did not correct FDAs mistake.
At the same August 11, 2000 meeting, the senior FDA medical official in effect
overruled the primary medical reviewer and said the protocol design was prob-
ably acceptable.
The senior FDA official now believes she was misled by ImClone about its claim
that a human clinical trial showed no single agent activity. This official said
that this claim was a key factor in her decision to allow ImClones application
to proceed.
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FDAs decision to grant fast-track designation to ImClones Erbitux appears to
have been based on the wrong version of the 9923 protocol, and was made be-
fore it had the single-agent data on Erbitux.
The 9923 study was afflicted with many problems. The BMS independent radi-
ology review showed that strict scrutiny of the study data resulted in a response
rate of only 12.5% (as opposed to the claimed 22.5% response rate) and that the
number of evaluable patients was only approximately 89 (as opposed to the
original 120). If these data were in fact correct, the 9923 study failed to meet
the 15 percent clinical endpoint set by ImClone and the study would be too
small to support an accelerated approval by itself.
BMS scientists were aware of the issues involving the response rate and the size
of the patient pool, and BMS apparently did not have the single-agent data
prior to entering into its agreement with ImClone in September 2001. Neverthe-
less, BMS went ahead with the ImClone agreement.
The results of the single-agent study showed enough activity in Erbitux alone to
throw into doubt the assumption used for the pivotal 9923 studythat the toxic
chemotherapy, irinotecan, needed to be used in combination with Erbitux to
produce stronger and more meaningful response rates. Because of this doubt,
FDA needed additional studies to resolve this issue, which would mean a sub-
stantial delay in launching Erbitux.
ImClone knew the results of the single-agent study on October 12, 2001, but its
then-CEO appeared to portray these results in a positive light to the BMS Chief
Scientific Officer.
On October 29, 2001, BMS consummated the tender offer with ImClone. As a re-
sult, Sam and Harlan Waksal made about $111 million from the sale of stock.
In acquiring their shares, the Waksal brothers had received loans from ImClone
to finance the exercising of options.
On November 30, 2001, key FDA reviewers recommended a refusal-to-file letter
for the Erbitux application.
On December 4, 2001, ImClones Regulatory Affairs Vice President confirmed in
a conversation with one of the FDA reviewers that an RTF letter is a realistic
possibility.
On December 5, 2001, senior FDA management at the Center for Biologics deter-
mined that an RTF letter would be sent to ImClone. It took several days for
all members of the FDA review team to learn of this decision and it did not
become official until a team meeting held on December 17, 2001.
On December 20, 2001, FDA informed ImClone and BMS that a decision had been
reached and that the decision letter would be sent on December 28, 2001.
ImClone and BMS officials suspect an RTF.
On December 24, 2001, an outside consultant to BMS obtained confirmation from
an FDA official that an RTF letter will be issued.
On December 25, 2001, a BMS executive informed Dr. Harlan Waksal that
ImClone would be getting an RTF letter.
On December 26, 2001, key ImClone and BMS officials were aware of the RTF.
ImClone sent a letter to FDA to try to prevent the RTF letter.
On December 27 and 28, 2001, Waksal family relatives and some friends sold
ImClone shares.
On December 28, 2001, ImClone received the RTF letter.
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Mr. GREENWOOD. The Chair thanks our witnesses for your testi-
mony and for your help of this subcommittee with its work and ex-
cuses you.
The Chair now calls forward Dr. Samuel Waksal, Ph.D., who is
the former chief executive officer of ImClone Systems. Would you
please pull the microphone forward very close to you and push the
button on it so that it is on.
Mr. SAMUEL WAKSAL. It should be on.
Mr. GREENWOOD. Thank you. Thank you. It is on. Dr. Samuel
Waksal is a former ImClone chief executive officer and is here with
us today under subpoena. On April 19, 2001, Dr. Waksal did sub-
mit to an interview2002, excuse meDr. Waksal did submit to
an interview with committee investigators that lasted for about 4
hours. Dr. Waksal was scheduled for another staff interview on
May 30 but withdrew from this scheduled interview on advice of
counsel. My understanding is that Dr. Waksal authorized his coun-
sel to advise the committee that he will rely on his constitutional
right not to testify at todays hearing. I believe that this privilege
should be personally exercised before the members of this sub-
committee, as we have done in the past, and that is why we have
requested Dr. Waksals appearance today, and I thank you for join-
ing us, sir.
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Mr. GREENWOOD. Dr. Waksal, on October 29, 2001, you and your
brother sold $1.6 million of shares of ImClone to Bristol-Myers
Squibb for about $111 million, a sale helped, in part, by all of the
hype ImClone generated about its purported wonder drug, Erbitux
and made possible, in part, by unsecured loans of about $35 million
that you and your brother received from ImClone so you could exer-
cise options to purchase ImClone stock at highly discounted prices.
During the same time period, ImClone was running the pivotal
clinical trial aimed at supporting an accelerated FDA approval for
ImClones cancer drug, Erbitux. The study turned out to be riddled
with severe problems with no apparent quality control by ImClone.
As a result, FDA refused to even accept the Erbitux application for
filing.
Given the contrast and outcomes, the financial gain of $111 mil-
lion for you and your brother before the FDA application was even
filed and the failure to deliver on your promise to thousands of very
sick cancer patients to have Erbitux on the market in spring of
2002, would it be fair to say that your strategy at ImClone was to
put personal profiteering ahead of patients, sir?
Mr. SAMUEL WAKSAL. Unfortunately, upon the advice of counsel,
I wish to assert my constitutional rights and respectfully decline to
answer.
Mr. GREENWOOD. We thank you, sir, and we respect your right
to do so. But let me be clear, Dr. Waksal. Are you refusing to an-
swer the question on the basis of the protections afforded to you
under the Fifth Amendment to the United States Constitution?
Mr. SAMUEL WAKSAL. Yes.
Mr. GREENWOOD. Dr. Waksal, do you intend to invoke your Fifth
Amendment rights in response to any and all questions posed to
you here today?
Mr. SAMUEL WAKSAL. Yes.
Mr. GREENWOOD. Okay. Then you are excused from the witness
table at this time, but I advise you that you remain subject to the
processes of this committee, and that if this committee needs such,
then we may recall you, sir.
Mr. SAMUEL WAKSAL. Thank you.
Mr. GREENWOOD. Okay. You are excused, sir.
The Chair then calls forward Dr. Harlan Waksal, M.D., who is
now the chief executive officer of ImClone Systems, Inc.; Dr. Laurie
Smaldone, M.D., senior vice president, Global Regulatory Sciences
for Bristol-Myers Squibb Company. And accompanying Dr.
Smaldone is Mr. Brian Markison, vice president, the Division of
Oncology at Bristol-Myers Squibb Company.
The Chair welcomes our witnesses. You are both aware, all three
of you are aware that this committee is holding an investigative
hearing, and it is the practice of this subcommittee to take testi-
mony in such hearings under oath. Do any of you object to giving
your testimony under oath this morning?
Mr. HARLAN WAKSAL. No.
Ms. SMALDONE. No.
Mr. GREENWOOD. Okay. It is also the responsibility of the Chair
to advise the witnesses that you are entitled to be represented by
counsel. Do either of the witnesses choose to be represented by
counsel? Dr. Waksal, do you?
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that does not change the fact that we let patients down, and for
that, I am truly sorry.
Second, as the companys new CEO, I am committed, absolutely
committed, to getting this drug approved. I will work closely with
the FDA and try to continue the cooperative relationship we have
had with the agency. We want to get them the information they
need as quickly as we can so that hopefully Erbitux can be avail-
able to cancer patients in desperate need of more treatments.
I appreciate the opportunity to be here today to answer your
questions.
[The prepared statement of Harlan Waksal follows:]
PREPARED STATEMENT OF HARLAN WAKSAL, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, IMCLONE SYSTEMS
Chairman Greenwood, Congressman Deutsch and Members of the Subcommittee,
my name is Harlan Waksal, and I am the President and Chief Executive Officer of
ImClone Systems. I have held that position for only three weeks, but I have been
with the company since it was founded, 17 years ago.
Thank you for this opportunity to tell you about Erbituxa potential new treat-
ment for cancer that attaches itself to growth factor receptors on cancer cells, de-
priving tumors of the ability to grow. Since we acquired the license for this com-
pound nine years ago, ImClone has invested hundreds of millions of dollars to sup-
port its clinical program of research and testing.
Our efforts reached a critical point two years ago. Over the course of the year
2000, doctors at preeminent research institutes such as the Memorial Sloan-Ket-
tering Cancer Center reported success in using Erbitux in combination with chemo-
therapy to treat terminally ill patients. These doctorsand their patientswere
telling us that the Erbitux combination therapy was shrinking solid tumors in pa-
tients who did not have other treatment options. As a result, we set out to make
this drug available to cancer patients as quickly as possible.
As this Subcommittee knows, Congress created the Fast Track process to en-
courage the expedited review of drug applications where the drug in question has
the potential to address an unmet medical need related to a life-threatening illness.
If ever a drug was a good candidate for Fast Track, Erbitux was it. And in fact,
the FDA granted Erbitux Fast Track status in January 2001.
During this same period, we had multiple meetings and conversations with the
FDA, to determine whether the clinical trial we had underway for colorectal cancer
patientsgiving Erbitux and chemotherapy in combination to patients who had
failed chemotherapy alonecould serve as the basis for regulatory approval. After
the FDA reviewed our test protocol, we reached an understanding with the agency
that this clinical study could be the pivotal study for our application to win approval
for Erbitux.
Over the next few months, we worked closely with the FDA to develop an applica-
tion for approval. When the FDA asked questions, we answered them. When the
FDA asked for more data, we got it for them. Such give and take is a common part
of the application process.
We were very pleased with the results of the clinical trial. It found that roughly
20 percent of patients responded to the treatment. These results were reported by
independent physicians at preeminent cancer centersdoctors without any stake in
the outcome, who saw this drug at work, first hand, in their patients. These conclu-
sions were then confirmed by an independent review committee, commonly known
as an IRAC. The approximately 20% response rate was an impressive result, since
the FDA had approved irinotecana chemotherapy drugwith a 13% response rate
in a similar patient population.
But we were not the only people excited by the potential of Erbitux. In May of
2001, doctors at the leading oncology conferenceafter hearing a presentation from
Dr. Leonard Saltz regarding the clinical trialreacted enthusiastically to the data.
And in September of last year, after months of extensive due diligence by their top
scientists, Bristol-Myers Squibb committed to investing $2 billion in ImClone and
Erbituxa huge vote of confidence from the worlds leading oncology pharma-
ceutical company, which clearly believed that Erbitux showed great potential.
As the Subcommittee knows, despite these encouraging signs, the FDA refused to
file ImClones application for Erbitux. Todays hearing will be filled with questions
as to why the FDA refused to file our application, which I am happy to answer. But
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in brief, let me say that with the benefit of 20/20 hindsight, we now know that we
could and should have done a better job in putting together our application package.
Many of our critics have suggested that our pivotal trial was too small, and that
our results were not proven by the most rigorous testing standards. But, I would
remind those critics that Congress explicitly created Fast Track to bring drugs to
market that had not been through the rigors of a Phase III testwisely deciding
that when patients are dying, and there is a drug that demonstrates potential for
treating those patients, the balance should be struck toward getting new drugs to
those patients quickly.
Notwithstanding our setbacks, ImClone and its partners continue to work closely
with the FDA to move forward in the approval process. Today, Erbitux remains on
the FDAs Fast Track. We will be submitting new data as it comes in, and still
hope to win accelerated approval. We also have underway a variety of other clinical
tests, including large, Phase III trials.
Mr. Chairman, in conclusion, I would like to make two points.
First, while we had the right intentions in trying to get Erbitux through the filing
process in 2001, we failed. Yes, setbacks in the regulatory process are common, and
ImClone is hardly alone among drug companies in failing to win swift approval for
a drug. But that does not change the fact that we let patients down, and for that,
I am truly sorry.
Second, as ImClones new CEO, I am committedabsolutely committedto get-
ting this drug approved. I will work closely with patients and the advocacy commu-
nity to see this through. And I will also work closely with the FDA, to continue the
open and cooperative relationship we have had with the agency. We want to get
them the information they need, as quickly as we can, so that hopefully Erbitux can
be available to cancer patients in desperate need of more treatment options.
I appreciate the opportunity to be here today, and will be glad to answer your
questions now.
Mr. GREENWOOD. The Chair thanks you, Dr. Waksal, for your
statement. The Chair also thanks you for your presence and your
willingness to come here without subpoena. And let me personally
say that I certainly hope that you succeed in having this drug ap-
proved if it will in fact help patients.
Dr. Smaldone, you are recognized to give your opening statement
for 5 minutes, please.
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Thank you, Mr. Chairman. My name is Laurie Smaldone, and I am senior vice
president of Worldwide Regulatory Science at the Bristol-Myers Squibb Pharma-
ceutical Research Institute, and a physician specializing in oncology. I have been
with Bristol-Myers Squibb for 17 years, and before that I was an oncologist in aca-
demic practice. While the scope of my responsibilities at Bristol-Myers Squibb
crosses therapeutic lines, a great deal of my professional experience has been in the
area of cancer and, more specifically, cancer treatments.
I am pleased to have this opportunity to address the subcommittee, as well as re-
spond to its questions, about Bristol-Myers Squibbs commitment to the anti-cancer
agent Erbitux. First, I would like to say thatfrom a scientific and clinical perspec-
tivewe believe that Erbitux is an active anti-cancer agent. Evidence suggests that
Erbitux shows anti-tumor activity in patients with late-stage colorectal cancer that
is refractoryor, in other words, unresponsiveto available treatments. These are
patients who otherwise have few if any treatment options available to them. We be-
lieve this about Erbitux now, just as we believed it when we invested in ImClone
Systems and entered into a commercialization arrangement with ImClone relating
to Erbitux back in September 2001.
It is important for the subcommittee to understand that the disease for which
Erbitux is being investigated as a possible treatmentadvanced refractory
colorectal canceris particularly insidious. For individuals diagnosed with it, the
prognosis is generally grim. Still, many patients are desperate for any treatment
that will give them additional time with family and other loved ones. And in some
cases, Erbitux has helped provide this additional time.
While the difficulties in finding adequate treatments for cancer are well known,
it is useful to point out that great progress has been made in understanding the
course and complexities of cancer. Nonetheless, beyond early detection and surgical
intervention, major impact with chemotherapy and biologic therapies is limited, and
still most tumors go undetected until quite an advanced stage.
As the worlds leading provider of cancer therapies, Bristol-Myers Squibb has fo-
cused much of its research and development on finding better treatmentsmore tar-
geted and less toxic therapies than those currently available. And our strategy also
has been to look outside our company for promising compounds such as Erbitux,
which itself represents a new and potentially revolutionary way of fighting cancer
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through a more targeted approach. Still, we realize that these advanceswhile sig-
nificantare not the magic bullet against cancer, but they represent real progress.
My second point is that it is importantin the midst of all the issues identified
that we together find a way to address these issues and make Erbitux available to
patients as quickly as possible. That is why we are working closely with ImClone
to resubmit the application for Erbitux to the U.S. Food and Drug Administration
as soon as possible. While some patients have been able to benefit from Erbitux in
clinical trials and compassionate use programs, we know that only after approval
and commercialization will all those who truly need the drug actually get it, and
will physicians be able to further evaluate its role in different clinical settings.
Finally, I wish to stress that this is about everyday people from all walks of life
thousands of them each yearwho one day go to their doctor or to the hospital and
have their entire life turned upside down by a diagnosis of colon cancer or other
solid tumors. For these people, Erbitux is not an exciting scientific advance or a
compelling idea or a promising investment. Its a way to have more time.
I can say this with some conviction because I had the honor recently of meeting
an Erbitux patient who told me quite candidly what the drug has meant to her. And
she has permitted me to share her story with the committee, which I will do now,
briefly.
A little over a year ago, when she was 38 years old, Michael Ann Mullinix of
Belvidere, Illinois, was told by her doctor that she had stage 4 colon cancer that
had spread to her ovaries. Even with surgery, she was given just 9 months to live.
A wife and a mother of teenage children, Michael Ann decided she was going to
fight the odds by going on an Erbitux regimen, which she had heard about on tele-
vision. Following surgery, she began treatment with Erbitux and other
chemotherapeutic agents last August as part of a clinical study. And as of today,
she is essentially cancer free.
In the course of our conversation, Michael Ann told me that she was worried. Not
that her cancer would return, or how she was coping with this serious illness. She
was worried about the future of Erbituxabout its continued availability as a ther-
apy alternative, not just for her benefit but for many others who would potentially
benefit from it as well. And when she heard that I was coming to testify before this
subcommittee, she asked me to convey the message I have stressed several times
in this statement: we need to work together to do all we can to get Erbitux to all
the patients who need it as quickly as possible.
I should point out that there are risks involved in this project, just as there are
risks in all biomedical research. We have no guarantee that Erbitux ultimately will
be the important therapeutic advance we expect it to be. But knowing what we
know about it today, there is every reason to be hopeful about its promise and to
move forward with the clinical development and registration process.
Once again, I am grateful for this opportunity to address the committee on this
important subject. Ill be happy now to answer any questions you may have.
Mr. GREENWOOD. Thank you, Dr. Smaldone. We appreciate your
presence and your testimony.
Ms. SMALDONE. Thank you.
Mr. GREENWOOD. The Chair recognizes himself for 5 minutes for
purposes of inquiry. Let me address my questions initially to Dr.
Waksal. When ImClone filed the Erbitux biologics licensing appli-
cation, otherwise known as a BLA, on October 31, 2001, did you
expect that ImClone was in fact on a glide path toward approval?
Mr. HARLAN WAKSAL. Absolutely. We did file it at that time. In
fact, it was a rolling BLA. That was the last piece of it. We thought
we were well on the track to moving this drug through approval.
Mr. GREENWOOD. And did you expect that Erbitux BLA to go be-
fore the February 2002 FDA Advisory Committee called ODAC?
Mr. HARLAN WAKSAL. Well, we were hopeful that based on tim-
ing of the review clock that the February ODAC would be the ap-
propriate time for this drug to be in front of the Oncologic Drug
Advisory Committee.
Mr. GREENWOOD. Okay. Does Lilly Lee, ImClones Regulatory Af-
fairs vice president report directly to you?
Mr. HARLAN WAKSAL. Yes, she does.
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Mr. GREENWOOD. And was she reporting to you her contacts and
communications with FDA during the approval process?
Mr. HARLAN WAKSAL. Yes, she was.
Mr. GREENWOOD. Okay. Dr. Lee, could you please come forward
to be sworn in and answer a few questions? Welcome, Dr. Lee. You
may be seated for a moment and then we will ask you to stand
again. You have heard me say, Dr. Lee, that this is an investiga-
tive hearing, and it is our practice to take testimony under oath.
Do you have any objections to giving your testimony to us under
oath?
Ms. LEE. No.
Mr. GREENWOOD. Okay. You also should be advised that you are
entitled to counsel. Do you wish to be advised by counsel?
Ms. LEE. Yes, please.
Mr. GREENWOOD. Okay. And could you identify your counsel for
us, please?
Ms. LEE. Mr. Richard Emory.
Mr. GREENWOOD. Mr. Richard Emory?
Ms. LEE. Yes.
Mr. GREENWOOD. Okay. Thank you. In that case, would you now
rise and raise your right hand?
Ms. LEE. Sure.
[Witness sworn.]
Mr. GREENWOOD. Thank you, Dr. Lee. Did you have a face-to-face
meeting with the FDA reviewers on December 4, 2001?
Ms. LEE. Yes, I did.
Mr. GREENWOOD. Okay. Did the FDA reviewers raise serious
questions about the documentation of the study at that time?
Ms. LEE. They had raised questions about the documentation.
Mr. GREENWOOD. Okay. Did you ask the FDA reviewers whether
the FDA was going to send ImClone a refusal-to-file letter?
Ms. LEE. No, I did not ask that.
Mr. GREENWOOD. Okay. Did it come up in the conversation? Was
there any discussion of the possibility of a refusal-to-file letter?
Ms. LEE. The only mention of a refusal-to-file was in the context
of the FDA reviewer laying out the next steps, and it was one of
the three possible outcomes after the would have the internal filing
meeting. The three outcomes that he had laid out is, one, the FDA
could accept and review; two, since this was a rolling submission,
ImClone may decide that the last piece was actually not the last
piece that complete the BLA; and three, is the FDA may issue a
refusal-to-file, RTF. So these three options are really any drug that
filed an application, any BLA would face those three same sce-
narios.
Mr. GREENWOOD. Did you not tell our committee staff in your
interview that after your conversation an RTF letter for the first
time became a possibility in your mind?
Ms. LEE. For me it was on December 13 that the possibility that
the reviewissues that we were working on with the FDA may
lead to an RTF.
Mr. GREENWOOD. Okay. Let me turn back to you, Dr. Waksal.
Mr. HARLAN WAKSAL. Yes, sir.
Mr. GREENWOOD. Do you recall Dr. Lee telling you about this
meeting?
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put it out in the real world. Therefore, if it is only Phase II, you
still had two more phases to go through if you went through the
regular process.
Mr. HARLAN WAKSAL. Actually, it was Congress who stipulated
in Fast Track designation
Mr. STUPAK. That is true.
Mr. HARLAN WAKSAL. [continuing] that studies exactly like this
could be designated to be moved forward toward approval.
Mr. STUPAK. Exactly.
Mr. HARLAN WAKSAL. Phase II studies, sir.
Mr. STUPAK. And Congress also said that if you are going to do
a Fast Track legislation, it has to be tightly controlled, tightly reg-
ulated, and you must follow the regimen to a tee; otherwise, we are
not going to allow it.
Mr. HARLAN WAKSAL. And we have agreed that there were prob-
lems in the protocol.
Mr. GREENWOOD. Time of the gentleman has expired. The Chair
recognizes the chairman of the full committee, Mr. Tauzin, for in-
quiry.
Chairman TAUZIN. Thank you, Mr. Chairman. Gentlemen, let me
take you back to December 20. Are you aware of the fact that the
FDA called both ImClone and I think Bristol-Myers Squibb on that
date to say, The decision has been made. Dont call us, dont both-
er us anymore. We will announce the decision on December 28. Is
that correct?
Mr. HARLAN WAKSAL. Well, Congressman, what took place is we
actually had called the FDA to find out what the status was, and
we were informed at the time that a decision had been made and
that it would be coming sometime the next week, right.
Chairman TAUZIN. Is that correct, Mr. Markison?
Mr. MARKISON. That is correct.
Chairman TAUZIN. Turn your mike on please, sir. Is that correct?
Mr. MARKISON. Yes, that is correct.
Chairman TAUZIN. Did you get a call from FDA saying, Dont
call, dont bother us anymore. We are going to have the decision
it is already made, we will announce it next week on the 28th.
Mr. MARKISON. Was that question directed to me or Dr. Waksal?
Chairman TAUZIN. Yes, sir. Directed to you, sir.
Mr. MARKISON. I never received a call from the FDA.
Chairman TAUZIN. Did you know that FDA had called ImClone?
Mr. MARKISON. I was aware of the teleconference that Dr.
Waksal referred to. And I was aware subsequently of a dialog
around that within both companies, and we acknowledged the
fact
Chairman TAUZIN. All right.
Mr. MARKISON. [continuing] that that was a very difficult call.
Chairman TAUZIN. Now, on December 21, Christmas day, you
tracked Dr. Waksal down to talk to him. Where did you find him?
Mr. MARKISON. Well, sir, first I must apologize to the chairman
as well, I am also represented by counsel. I wasnt asked to point
that out. I feel that I should point that out.
Mr. GREENWOOD. Please identify your counsel.
Mr. MARKISON. Mr. Hamilton, behind me.
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Mr. GREENWOOD. All right. Say his name clearly in the micro-
phone, please. State his name.
Mr. MARKISON. Mr. James Hamilton.
Mr. GREENWOOD. Okay.
Mr. MARKISON. The only reason I didnt offer his name, I wasnt
asked previously, sir.
Mr. GREENWOOD. Fair enough.
Chairman TAUZIN. All right. We got your counsel on the record.
Now, let us see if we can get the question answered. The question
is on December 25 you apparently tracked down Dr. Waksal by
phone to have a conversation with him, Christmas Day, December
25. Where did you find him?
Mr. MARKISON. I was able to reach Dr. Waksal at his house in
Telluride.
Chairman TAUZIN. That is in Colorado?
Mr. MARKISON. I believe so, yes.
Chairman TAUZIN. So what was the purpose, why were you call-
ing him on Christmas Day at his house in Colorado?
Mr. MARKISON. The reason I called Dr. Waksal was because on
Christmas Eve I had heard from outside counsel to BMS, Mr. Allan
Bennett, that through a contact at the FDA we had heard that a
refusal-to-file letter was a distinct possibility. And then I tried to
reach Dr. Waksal that evening, called his home, but did not leave
a message on his machine and then called him on Christmas Day
to relay that information.
Chairman TAUZIN. All right. Now, Dr. Waksal, you tried to reach
your brother the next morning, you called him three times, I think,
starting at 6:30 a.m.; is that correct?
Mr. HARLAN WAKSAL. In fact, I called many members of ImClone
senior management, including Sam. I was unable to reach him.
Chairman TAUZIN. Where was he?
Mr. HARLAN WAKSAL. I believe he was somewherehe was on
vacation down in the Caribbean. I dont know
Chairman TAUZIN. St. Barts, you think.
Mr. HARLAN WAKSAL. That may be correct.
Chairman TAUZIN. And why were you trying to call him?
Mr. HARLAN WAKSAL. I had just heard from our colleagues at
Bristol-Myers that we had a refusala high potential, a high likeli-
hood of receiving a refusal-to-file, and I was calling all the senior
members of management to participate in a conference call that
was scheduled for 10 a.m. eastern time where we could discuss our
options.
Chairman TAUZIN. Now, for the record, both of you are testifying
that the most you got from this contact with a consultant who had
a contact with somebody at FDA that a refusal-to-file letter was
probable, likely? What did you hear exactly, Mr. Markison?
Mr. MARKISON. I had a dialog with Mr. Bennett where he de-
scribed that a refusal-to-file letter was probabilistic, highly prob-
able. And then, subsequently, in an e-mail to me, he did point out,
in no uncertain terms, that a refusal-to-file letter would be coming.
Chairman TAUZIN. No, no, wait a minute. So when did you get
that e-mail?
Mr. MARKISON. On Christmas Eve.
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Mr. HARLAN WAKSAL. First of all, the FDA had both versions of
the protocol prior to our meeting on August 2000, and indeed we
assumed, and I still believe, that the FDA was fully aware of what
those protocols are. It is a surprise to me that it is suggested that
we were somehow trying to fool them into thinking we were work-
ing under Version 1.0 versus Version 2.0. There would be no reason
for us to
Chairman TAUZIN. Well, clearly, they made a mistake, but our
investigators said it was within your power to correct the FDA mis-
take in August 11, 2000. Why wouldnt you, for the sake of getting
this drug approved more quickly and correctly, have corrected the
FDAs mistake on that date?
Mr. HARLAN WAKSAL. We would have absolutely corrected the
mistake had we known about it. The first I have heard about this
issue of Version 1.0/Version 2.0, sir, is here.
Chairman TAUZIN. We were also told, however, by the FDA offi-
cial who overruled the local review, that they believe they were
misled by ImClone about the claim that a human clinical trial
showed no single agent activity. Do you deny that?
Mr. HARLAN WAKSAL. Yes, absolutely deny that. We were very
clear with the FDA that the best way to use this drug, based on
the information we had in animal studies and even in the single
human study that we had engaged in, did not show major single
agent activity, that it is primarily a cytostatic drug. The only study
that was performed in humans was the study we did in renal cell
cancer, and we articulated those results, albeit in a different tumor
type.
Chairman TAUZIN. I am looking at the protocols
Mr. HARLAN WAKSAL. Yes, sir.
Chairman TAUZIN. [continuing] that are in dispute here. And
staff is pointing out to me, and I am tryingI am getting this cor-
rectly, that the protocol, the original version, says that following
two courses of Irinotecan, patients tumors were measured and
based on the results. Was there a change in that protocol?
Mr. HARLAN WAKSAL. Yes. Medical practice doesnt allow doctors
to continue patients on a drug if they have new lesions or progres-
sion. So the doctors, in conjunction with the company, made a
modification to the protocol to allow patients who were failing the
drug to be on the protocol in combination with 225, or Erbitux.
Chairman TAUZIN. Well, I am looking at the minutes of the meet-
ings with the FDA.
Mr. HARLAN WAKSAL. Yes.
Chairman TAUZIN. A meeting on August 11. And they are saying
that in fact this is the original version and that it was changed
later and that that is what they relied upon in literally making the
decision to overrule the medical reviewer and to approve this pro-
tocol. Do you deny that?
Mr. HARLAN WAKSAL. I am not aware of any of that. I am aware
of the fact that both protocols have been submitted to the FDA, and
I felt that both protocols
Chairman TAUZIN. We were told that you saw these minutes, did
you not?
Mr. HARLAN WAKSAL. The minutes to
Chairman TAUZIN. To the meeting.
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Mr. HARLAN WAKSAL. Yes, I have seen the minutes to the meet-
ing. I would like to see them again. I am not quite sure which part
you are referring to.
Chairman TAUZIN. Well, we will come back to it. We will get you
copies and I will ask the chairman to give me a unanimous consent
to come back to it in a minute. I want you to see it as we discuss
it.
Mr. HARLAN WAKSAL. I would appreciate it, Congressman Tau-
zin.
Mr. GREENWOOD. The Chair thanks the gentleman. The Chair
recognizes the gentlelady from Colorado for 5 minutes.
Ms. DEGETTE. Thank you, Mr. Chairman. Dr. Waksal, it is your
view that the problem with this Erbitux application is irregular pa-
perwork, right, in essence?
Mr. HARLAN WAKSAL. Well, that is one of the major problems,
and I think
Ms. DEGETTE. Well, what are the other major problems?
Mr. HARLAN WAKSAL. I think it was pointed out very carefully,
when you have a problem in documentation, it affects the entire
study.
Ms. DEGETTE. So, in essence, it is documentation, right? Yes or
no.
Mr. HARLAN WAKSAL. Yes.
Ms. DEGETTE. Okay.
Mr. HARLAN WAKSAL. But there are other issues as well.
Ms. DEGETTE. Okay. What are the other issues
Mr. HARLAN WAKSAL. Well, the
Ms. DEGETTE. [continuing] unrelated to documentation?
Mr. HARLAN WAKSAL. The other issues that need to be resolved
are the protocol violations that took place as well.
Ms. DEGETTE. And those are serious problems too, right?
Mr. HARLAN WAKSAL. Every clinical study has protocol viola-
tionsevery study.
Ms. DEGETTE. Right.
Mr. HARLAN WAKSAL. The real question is whether the protocol
violations affect the integrity of the trial.
Ms. DEGETTE. Okay. Sir, I apologize, they only give me 5 min-
utes.
Mr. HARLAN WAKSAL. I understand.
Ms. DEGETTE. And so with respect to the documentation, now
have youyou have had 6 months since you heard about this,
roughly.
Mr. HARLAN WAKSAL. That is correct.
Ms. DEGETTE. Have you fixed the documentation problems?
Mr. HARLAN WAKSAL. What we have donewe cant just fix the
problems, we have to fix the problems the right way.
Ms. DEGETTE. Okay. So the answer would be no.
Mr. HARLAN WAKSAL. No, that is not
Ms. DEGETTE. In 6 months you have not.
Mr. HARLAN WAKSAL. [continuing] really the answer. The answer
is what we have done is we have gone down the process and start-
ed discussions with the FDA to make sure
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Ms. DEGETTE. But are you aware that neither the 9923 or the
0141, the smaller trial, have measured life extension but rather
they have measured tumor shrinkage?
Ms. SMALDONE. I am very well aware of that.
Ms. DEGETTE. So in fact we dont know whether or not life exten-
sion is one of the benefits of this drug at this point, do we?
Ms. SMALDONE. That is absolutely correct. That is
Ms. DEGETTE. Thank you. Now, I was really touched by the pa-
tient that you talked about, and this is all about the patients, Mi-
chael Ann Mullinix. I am glad that her cancer seems to be gone.
But I think we should be clear, as far as we know, she is the only
patient who has had this result from this drug. Wouldnt that be
fair to say?
Ms. SMALDONE. That is not the way I would put it.
Ms. DEGETTE. You know other patients who have had this same
result?
Ms. SMALDONE. I would like to go back to our own analysis of
a reanalysis of 9923 that we conducted during the due diligence,
which was done with yet another independent review group outside
radiologists evaluating the scans. And
Ms. DEGETTE. And they say that other patients have been cured
aside from this one patient?
Ms. SMALDONE. There are other patients who have responded.
And at the worst case of that particular
Ms. DEGETTE. But none of them have had the cancer go away.
They have had the tumor shrink, right?
Ms. SMALDONE. We cannot comment on cure at this point in
time; it is way too early. These are response rates, which
Ms. DEGETTE. And that is even true with Michael Ann Mullinix,
isnt it?
Ms. SMALDONE. At this point in time, that is true, it is a re-
sponse.
Ms. DEGETTE. Thank you. Okay. I have a couple of other ques-
tions. Now
Mr. GREENWOOD. The Chair will be lenient with the time.
Ms. DEGETTE. Oh, I am sorry.
Mr. GREENWOOD. The Chair also would note that we are going
to two rounds with this panel.
Ms. DEGETTE. Thank you. Thank you, Mr. Chairman.
Mr. GREENWOOD. The Chair recognizes the gentleman from Ken-
tucky, Mr. Fletcher, for 5 minutes.
Mr. FLETCHER. Thank you, Mr. Chairman. Let me first ask Dr.
Waksal some questions. You started when the initial protocol or
the initial treatment protocols were enacted at some of the cancer
centers, you mentioned Sloan-Kettering as one, a very well-re-
spected cancer center, started reporting back that the results
seemed very positive. Is thathow is that documented? Is that just
kind of what we used to call hallway discussions, when you are on
rounds and things are going very well?
Mr. HARLAN WAKSAL. Very much so. We were getting case re-
portswe were getting information back that was written, data
was starting to come in, a lot of it was discussions with the doctors
at these various institutions around the country. There were about
20-some different centers who were using the drug in this trial. A
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ter, you would not have been entitled to the fast track approval
process. Thats the point that I am making.
And yet having made the modification, and knowing that the
agency was operating under this misconception, that you were
going to require a criteria based upon two cycles of standard doses,
you never said to them, hey, you have approved us on the basis of
a wrong protocol, and I dont understand why you would not have
done that.
Mr. HARLAN WAKSAL. Well, again
Chairman TAUZIN. You did review the letter did you not, Dr.
Waksal?
Mr. HARLAN WAKSAL. I have. I have reviewed the letter today.
Chairman TAUZIN. I mean, did you review it when you received
it?
Mr. HARLAN WAKSAL. I clearly would have read this letter when
I received it.
Chairman TAUZIN. I would have thought that you would have,
too. And it very clearly says that if the development program that
you have pursued does not continue to meet this criteria, which
you just described in the paragraph above, the application will not
be reviewed under the fast track program. I dont know how that
could be any clearer.
Mr. HARLAN WAKSAL. Well, there was no deception on our part
on what we were doing. We were very clear with the agency, and
I believe if the agency will be given the opportunity to respond,
maybe they could clarify whether or not this was a relevant issue.
I dont believe that this was a major problem as we move this
forward.
Chairman TAUZIN. Well, apparently this becomes the major rea-
son why the letter isa refusal arrives. I mean, the agency finally
recognizes that it was pursuing a course of approval here based
upon a misconception.
Mr. HARLAN WAKSAL. I am not aware of that, sir.
Chairman TAUZIN. I am being corrected. I am told that they
didnt realize that either until we pointed it out to them, which is
really perhaps even more damning. Let me
Mr. HARLAN WAKSAL. I dont believe that was an issue that the
agency or the company focused on as being important.
Chairman TAUZIN. But that is amazing to me. It really is.
Mr. HARLAN WAKSAL. Well, I think it is because it really was not
an issue that spoke to the heart of whether or not this drug was
working or not. I dont believe that that is a critical component.
Chairman TAUZIN. Well, all we know is what the documents tell
us, and what is concerning to us is that when an agencyour prob-
lem is looking at this process to see whether it works well, and
whether it fails or not.
Mr. HARLAN WAKSAL. Yes, sir.
Chairman TAUZIN. And we are seeing a process whereby the
agency approves you for this fast track, which is a special proce-
dure, based upon a criteria clearly defined.
It gets changed, and the investigators for our committee, and in
interviewing the senior FDA official, believes that in fact that they
made their decisions based upon the wrong version of the protocol,
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and they also state, which you have denied under oath, that
ImClone mislead them about the claim of single agent activity.
So we have got a situation where we are going to have to find
where the truth lies in between those two statements.
Mr. HARLAN WAKSAL. There is no question that at no time did
we mislead the FDA regarding what we were doing, and again I
want to emphasize that the fact that the FDA didnt emphasize
this issue, even at the refusal to file time, and the fact that I didnt
recognize it until today, this does not seem to be a major issue re-
garding why we received the refusal to file.
Chairman TAUZIN. Well, they seem to think it was a major issue
when it was pointed out to them finally.
Mr. HARLAN WAKSAL. Thats very possible.
Chairman TAUZIN. I want to take you to statements that your
brother, Sam, made when he was chief executive officer on the
29th, as reported by Reuters. Do you have a copy of that, too?
Mr. HARLAN WAKSAL. I do not.
Chairman TAUZIN. I am going to read it to you, and we will make
a copy available to you as I read it to you.
Mr. HARLAN WAKSAL. I believe I have a copy now.
Chairman TAUZIN. All right. It says that Sam Waksal, ImClones
chief executive officer, told Reuters that the agency first wants
more annotation information about how the company verified that
patients enrolled in these trials had indeed failed, et cetera.
It says also further down that there is a prediction that it would
take onlyWaksal said that company officials hope to meet with
the FDA within 10 days to supply necessary information to the
agency 6 to 10 weeks.
There were a lot of statements made minimizing the effect of this
letter apparently of denial, and then we have something that I
hope the Bristol-Myers witnesses will help me understand. We
have got a confidential document. Do you have it in front of you?
It is B019629.
And let me read it to you. It says, Nancy, I agree that some, a
lot, of Sams comments are misleading, and at this point we should
continue to be silent. What does that mean, and what is Bristol-
Myers doing at that point?
I mean, you are hearing the chief executive officer of the com-
pany make these comments publicly, and then an e-mail is ex-
changed saying that we agree that some, a lot, of Sams comments
are misleading. At this point we should continue to be silent.
What is the meaning of that kind of an e-mail? Mr. Markison.
Mr. MARKISON. Well, sir, these are the comments of two people
that are within the company. I am not quite sure they represent
the entire company. However, we were certainly going through a
period where we were trying to determine the best course of action,
and that is where we were at that time.
Chairman TAUZIN. But of course the problem was that you were
a partner in this operation, and you are aware that the chairman
of the company is making misleading statements to the public in
the middle of this crisis, or at least the comments were that you
were, and that people in your company were saying that we should
continue to be silent.
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our staff that you would never allow your company to submit an
application like that?
Ms. SMALDONE. The discussion was as it relates to quality and
study conduct, and quality assurance. We within Bristol-Myers
Squibb work at very high standards, and after the refusal to file
letter, and the extent, and the depth of the issues that were raised
in the refusal to file letter, it was very clear that there were some
very substantivewhat I would call study conduct quality assur-
ance types of issues, that is correct.
Mr. STUPAK. So you did tell our staff that you would never
let
Ms. SMALDONE. Thats correct.
Mr. STUPAK. Okay. So, Bristol sent in an application such as
what ImClone did, and you said there was some substantive issues,
and thats why the refusal letter, right?
Ms. SMALDONE. Yes.
Mr. STUPAK. So it is more than just documentation?
Ms. SMALDONE. In its cumulative, it certainly appeared to be
more than documentation.
Mr. STUPAK. And then in the substantive issues that the FDA
raised in its refusal, the FDA was fully justified in sending
ImClone an RTF based on the application that they submitted in
the fall; isnt that correct?
Ms. SMALDONE. When we say, Congressman, the refusal to file
letter, and went through a thorough review and evaluation of it, it
became apparent that in accumulative of all of the issues that were
raised there, it appeared difficult forand I cant speak for the
FDA, but based on my experience, it appeared difficult for them to
reconstruct the datasets and follow the chain of evidence.
Mr. STUPAK. So if they couldnt follow the chain of evidence, and
if they couldnt reconstruct it, they were certainly justified then in
putting out the RTF were they not in your 17 years of experience
as you said?
Ms. SMALDONE. If I can make some qualifications to that, sir. I
have never seen a refusal to file letter before, and I have never
since.
Mr. STUPAK. Well, the refusal to file was based upon those sub-
stantive issues that you said were lacking, correct?
Ms. SMALDONE. That is correct.
Mr. STUPAK. So if the refusal is based upon substantive issues,
then the FDA was correct in putting an RTF on?
Ms. SMALDONE. I believe that it had some justification based on
what I was able to see.
Mr. STUPAK. Okay. On December 4, there is starting to catch
wind that maybe ImClone or that ImClone might be receiving an
RTF or that there application would not be approved.
Did you or anyone from Bristol-Myers Squibb call up and say,
look, what do you need to make this thing work, and can we with-
draw it, or can we rework it? Did anyone do anything like that that
you know of?
Ms. SMALDONE. Excuse me, sir. With the FDA, or with
Mr. STUPAK. With the FDA. Did you call the FDA and say how
can we rework this. Can we withdraw. Let us do further work on
this?
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Mr. GREENWOOD. Excuse me, but the gentlelady is being very po-
lite in allowing Dr. Fletcher to go ahead.
Mr. HARLAN WAKSAL. I hope this level of politeness continues in
this direction as well.
Mr. FLETCHER. Dr. Smaldone, when we asked Dr. Waksal about
compliance with the protocol, it mentioned thatand let me pref-
ace this by saying is this going through the refusal to file letter
here, there seems likeand maybe it is just in retrospect, but I
think you probably share that.
But there is a lot of discrepancies here that are rather obvious.
If you can document CT scans on results with irinotecan before you
begin the combined therapy, you have no base line, and there was
some problems there.
But one of the things that was stated is thatfor example, it
mentioned the elevated liver function test and some other things
of folks who have may been entered into the study that were not
eligible, was that the oncologist may not have had the specific pro-
tocol right there in front of him.
And my recollection, and we have had patients entered into pro-
tocols, and we have worked with protocols personally, and gen-
erally there is a whole team that works. Often times nurses that
screen these patients, and they are very thorough, and the protocol
is very clear.
It is outlined in fact to assure that you meet the FDA criteria.
All of these things are checked off and file forms are written, and
all the criteria is written down. So how does that happen that
these were entered and maybe some oncologist didnt know that
they met the protocol? That seems odd to me.
Ms. SMALDONE. It seems odd to me, too, sir. I really cant com-
ment beyond that.
Mr. FLETCHER. I mean, these are not fly by night oncologists.
These are probably the worlds experts. Oncologists is what we are
talking about. I mean, is the protocol that poorly structured, and
was it that poorly organized.
I know that there are mistakes and things like that that we
make, and we are humans, and there are times where there are
deviations, or because of clinical reasons that you have to depart
from the protocol.
But these are things that are clearly aberrations, and I just won-
dered from your standpoint if you have ever seen anywhere where
protocols are done where the clinician doesnt have the protocol in
front of him.
Ms. SMALDONE. Normally, that is not the case, sir.
Mr. FLETCHER. Okay. Dr. Waksal, if you could maybe respond to
that. I know that you said, well, maybe they didnt have it in front
of them. I assume you are a clinician as well.
Mr. HARLAN WAKSAL. I am, but I cant give an explanation on
it. It was not because of a lack of clarity in the protocol. Why it
took place, I dont know. I can tell you that the majority of these
had to do with what I mentioned before, the liver function test
problems.
And in fact that is something that makes the patient sicker. It
means that these patients were a little bit more else. So the doctors
must have felt, and I am speculating, must have felt that they still
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TESTIMONY OF PATRICIA KEEGAN, DEPUTY DIVISION DIREC-
TOR, CENTER FOR BIOLOGICS EVALUATION AND RESEARCH,
OFFICE OF THERAPEUTICS RESEARCH AND REVIEW, DIVI-
SION OF CLINICAL TRIAL DESIGN AND ANALYSIS, U.S. FOOD
AND DRUG ADMINISTRATION; ACCOMPANIED BY RICHARD
PAZDUR, DIRECTOR, DIVISION OF ONCOLOGY DRUG PROD-
UCTS, OFFICE OF DRUG EVALUATION I, CENTER FOR DRUG
EVALUATION AND RESEARCH, U.S. FOOD AND DRUG ADMIN-
ISTRATION; LEE H. PAI-SCHERF, MEDICAL OFFICER, CLIN-
ICAL REVIEWER, CENTER FOR BIOLOGICS EVALUATION AND
RESEARCH, OFFICE OF THERAPEUTICS RESEARCH AND RE-
VIEW, DIVISION OF CLINICAL TRIAL DESIGN AND ANALYSIS,
ONCOLOGY BRANCH, U.S. FOOD AND DRUG ADMINISTRA-
TION; GEORGE Q. MILLS, ACTING CHIEF, TEAM LEADER,
CENTER FOR BIOLOGICS EVALUATION AND RESEARCH, OF-
FICE OF THERAPEUTICS RESEARCH AND REVIEW, DIVISION
OF CLINICAL TRIAL DESIGN AND ANALYSIS, ONCOLOGY
BRANCH, U.S. FOOD AND DRUG ADMINISTRATION; AND
SUSAN M. JERIAN, MEDICAL OFFICER, TEAM LEADER, CEN-
TER FOR BIOLOGICS EVALUATION AND RESEARCH, DIVI-
SION OF CLINICAL TRIAL DESIGN AND ANALYSIS, ONCOL-
OGY BRANCH, U.S. FOOD AND DRUG ADMINISTRATION
Mr. GREENWOOD. And let me begin
Ms. KEEGAN. Mr. Chairman, we were wondering if you would be
interested in having us present, or having myself present, some
background on the FDA chronology of this application as it might
streamline your questioning.
Mr. GREENWOOD. Sure. If you are prepared to do that, that
would be most helpful, please. You are recognized.
Ms. KEEGAN. I am Dr. Patricia Keegan. I wanted to say that the
application, the IND, for ImClones Erbitux, was filed in 1994, and
that the IND application was filed in order to conduct clinical stud-
ies in humans in the United States with the FDA.
A number of studies have been submitted to that IND, and in the
late spring of 2000, ImClone contacted us to talk and to request
that we have a meeting to talk about what they thought were some
very promising results with a Phase II study that has been sub-
mitted to that IND, and the study conducted in 1999 as you have
heard.
We agreed to meet and talk about the results of that study, and
we met with the company in August of 2000. The discussion at that
time was centered on whether or not the promising results that
were being reported to us, which was a response rate of about 20
percent in patients with metastatic colorectal cancer, with no avail-
able therapy, might be sufficiently promising to warrant consider-
ation for an accelerated approval based on that end point of that
observation of tumor response or tumor shrinkage.
We discussed at that meeting the adequacy of the trial itself, and
I would say that we concur with the statements made by Dr.
Waksal that that trial was not intended either by ImClone or our-
selves to be a registration or a major efficacy trial.
And the specific design elements of that trial had not been evalu-
ated critically by the FDA. At the time of the meeting, we sat to
discuss whether or not the data, which indeed appeared to be
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Mr. STUPAK. So then, Dr. Keegan, why was the medical review
overruled if you will, or the supervisor overruled the decision, or
the medical review officers indications?
Ms. KEEGAN. I would attribute it to a difference of opinion in
looking at the information. It was my assessment that a drug that
is purported to give an approximately 20 percent response rate in
patients with refractory disease was something that should be eval-
uated further.
And we should provide guidance to the company on the kinds of
information, and the way they should go about providing evidence
to the FDA so that we could consider that and review the data.
Mr. STUPAK. So before August 11 then, did you review the med-
ical evidence that had been submitted?
Ms. KEEGAN. I did not review the entire file. I reviewed the pre-
meeting package, which was provided to us, which was the sum-
mary data.
Mr. STUPAK. And in that pre-meeting documentation, it had Dr.
Jerians recommendation that we not move forward with this, cor-
rect?
Ms. KEEGAN. Could you repeat that?
Mr. STUPAK. Sure. You said that you reviewed the pre-meeting
documentation, and you read some of it, and there was a summary,
and I expect that would include Dr. Jerians recommendation that
you not move forward with this?
Ms. KEEGAN. Dr. Jerians recommendations were really verbal.
We had a meeting, a discussion, for which there were no minutes
kept, and I think the handwritten notes were really her assessment
written down, but there was no formal memo written. I think it
was just the discussion of the review team.
Mr. STUPAK. Okay. Well, her memo, and her notes from the
meeting, state that ORR, overall response rate, equals 15 percent
clinically significant for colorectal trackIm sorry, for colorectal
CPT-11 failure, correct? That is one of her concerns, right?
Ms. KEEGAN. Yes.
Mr. STUPAK. Is that correct?
Ms. JERIAN. May I clarify?
Mr. STUPAK. Sure.
Ms. JERIAN. I believe what you are reading from, although it
would help if I could see the document, are the questions that the
sponsor was asking of us.
Mr. STUPAK. Okay. And then there is another one that says
CP02-9923, and that is the protocol that we are talking about, meet
accelerated approval criteria in fast track, and then after that it
says no. So that would be from your notes, right?
Ms. JERIAN. Those are from my notes, yes.
Mr. STUPAK. Okay. So was it the 20 percent then, because the
medical review officer was saying 15 percent; and is it the 20 per-
cent that was in that you decided that we should shoot for?
Ms. KEEGAN. Well, actually, it was the precedent that has been
set by the approval of the irinotecan, which was approved on an
overall response rate of 13 percent.
And if 13 percent was sufficient to approve irinotecan, it is hard
for me to believe that we should judge a much higher standard for
Erbitux.
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one cycle of the drug that we are talking about showed that the pa-
tient had no metastatic disease at all.
And the question is was this a miraculous cure, or was there any
metastatic disease at the very beginning, and that is just very trou-
bling. There is something called a special protocol assessment,
and
Mr. PAZDUR. But could I justI think what you are pointing to
and getting at is that it is sloppy work.
Mr. FLETCHER. Well, thats it, and I have the utmost respect for
our institutions of health care in this country, even though a com-
pany has the inexperience, and thats why I wanted to ask you
about this special protocol assessments.
Is there a mechanism that when you have a company that may
have an excellent product, and some very brilliant minds that have
developed something, that as they bring it to the FDA that there
is some assurance that there are some special protocol assessments
that are done to ensure that they are following this protocol?
Because that is in the interests of the patient, and I realize that
there is staffing limitations, et cetera.
Mr. PAZDUR. The special protocol assessment isnt to follow a pro-
tocol or to audit it as you are suggesting. What special protocol as-
sessments are, are basically we have a meeting with the company,
an end of phase two meeting, where we discuss their pivotal reg-
istration trials.
Those trials, the written protocol is then sent to the FDA. That
protocol is then reviewed in detail. The statistical plan is looked at,
and the eligibility plan is looked at. The treatment plan is looked
at. They then get a written letter back from the FDA with what
the FDA would like to see in the protocol, and what the company
would like to see in the protocol. A meeting of minds is had there,
and an agreement on a final protocol is established.
The meaning of a special protocol assessment then is that the
FDA cannot deviate from its agreement with the company on that
unless there is an overwhelming new medical discovery that comes
along, or new medical situation.
So it locks the FDA and the sponsor into an agreement, and that
has to be so that the FDA does not have the complaint that we are
arbitrary and capricious in our decisions, and in our review, and
we said this at one time, and we said something else at another
time. It locks us into an agreement.
Mr. FLETCHER. Let me ask a couple of other questions. One is do
you thinkI mean, these are patients where we have to under-
stand from a clinical standpoint that you are dealing with patients
who have no other hope.
So there is a strong desire to give them some hope, and if a clini-
cian sees that this medicationI just came from a patient who had
a response to this, and it is promising, certainly there would be a
great deal of pressure to make sure that this individual was eligi-
ble.
You are dealing with real people, and you are dealing with hope
where there is no hope. So do you think that influenced the dis-
cipline, or the lack of discipline that we see in this study or not?
Including the hype about the effectiveness of this drug.
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Mr. PAZDUR. Possibly, but we see that in other areas, and that
doesnt account for really sloppiness to be honest, and to really
evaluate the situation.
There are other mechanisms to avail the patient to therapies,
rather than trying to get them in to the protocol in an artificial
fashion, and those include a compassionate use program, expanded
access program, et cetera.
Mr. FLETCHER. So that is not an excuse for not complying?
Mr. PAZDUR. It should not be.
Mr. FLETCHER. Because actually in the long run from what I un-
derstand, you would discredit the trial, which would hurt patients
in the future, which is exactly what happened here. Dr. Keegan, let
me ask you something.
We have this disparity, in the sense that as a trial is being done,
a company has the ability to issue press releases and with the re-
sult in this situation of producing a lot of enthusiasm about a drug
that may be overstated and maybe not.
But in this case, you all are settingand I think the chairman
mentioned this, you are there watching this happen, and yet one
of the requirements or restrictions on the FDA of speaking up
when you see this going on, especiallyand, Dr. Jerian, you men-
tioned that you had some concerns about the clinical trial as it goes
on.
I mean, are you all restricted from coming out and saying any-
thing? What kind of restrictions do the regulations have? I know
that there is some proprietary information that you have that you
cant disclose, but what are the restrictions on you all speaking up
as you see this disparity of a lot of hype that went on in the
ImClone situation?
And do you have a protocol on that? I mean, how do you all deal
with this?
Ms. KEEGAN. I dont know that we have an absolute standing op-
erating procedure that is written. If we were to see something very
disturbing in the Center for Biologics, because we have a slightly
different administrative structure, we would refer our concerns to
the advertising and promotional labeling branch, and say we have
some concerns about this.
And to the extent that we have in our hands the facts and can
document that the statements are untrue, and the statements are
very egregious, it is possible that the advertising and promotional
labeling branch could write some sort of letter to the sponsor indi-
cating which statements we object to and which we think are false
and misleading.
I think we are often hampered in the pre-marketing setting by,
one, not actually having the facts and the raw data, and not being
able to tell how far off the mark they are, and the others might
be ones of semantics. If someone says interesting, it is hard to say
that is a misleading statement.
Mr. FLETCHER. In this situation, and I know that the August
meeting of 2000 requested fast track, and you felt like the trial was
adequate at that time given the fact of a 23 percent response. You
didnt feel like a randomized trial was necessary at that time be-
cause you didnt want to deprive patients from the medication, and
we can understand all of that.
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But as things started to unfold did you all become more skeptical
of this, and if you did, how much communication was there where
you picked up the phone and said, Sam, I think you all are over-
selling this thing, and you might want to back off?
Ms. KEEGAN. I would say that I think that a reviewer, or an indi-
vidual could feel that they could make those statements to a spon-
sor, but that would not carry the same weight as coming toas a
letter or some other action.
However, I think again that the situation was in somewhat a
state of flux at the time, particularly during the review as we were
just becoming aware of some of these.
And I think that we have spent our focus on assessing the appli-
cation and not on monitoring the statements that were being made
publicly. At least I would say for myself that I really dont on a reg-
ular basis review the press releases and the clippings, because I
have other things that occupy my time.
Mr. FLETCHER. Mr. Chairman, I certainly appreciate the oppor-
tunity. Thank you very much, and thank you all.
Mr. GREENWOOD. The Chair thanks the gentleman. Dr. Mills,
when did you come to the realization that the deficiency in the
ImClone application were too great and that a refusal to file letter
would be necessary?
Mr. MILLS. At the standpoint that there were a number of points,
where we were talking with ImClone and discussing elements that
we found in the submission which were defective. By November 30,
where we had a telecon with ImClone, and discussing some addi-
tional elements on that day.
At that time, the number of defects that I had discovered with
Dr. Lee Pai-Scherf, such that we both came to the conclusion in
that telecon that we felt we needed to recommend to our group that
it was time to consider a refusal to file.
When we had just come out of that telecon, we briefed Dr.
Keegan at that time, and we gave her the information. She cer-
tainly understood our concerns, and she certainly felt that we need-
ed to provide the documentation to her because we were just com-
ing out of the telecon.
In the course of the following week, it was arrived that we were
going to refuse to file, based upon that information that we had
discovered in the course of the review, and the filing issues.
Mr. GREENWOOD. Did you have a meeting on December 4 with
Lilly Lee?
Mr. MILLS. That is correct.
Mr. GREENWOOD. Okay. Now, you were here for her testimony?
Mr. MILLS. Yes.
Mr. GREENWOOD. Would you characterize that meeting in terms
of the likely, or how you presented to her the likelihood of various
outcomes, because it seemed to me that she was saying that what
she came out of that meeting with was that, well, we could get a
green light, or we could get a red light, or we could get a yellow
light.
The odds are relatively equal that we could get any of those out-
comes. How would you characterize that meeting?
Mr. MILLS. I characterized it with Dr. Lee very carefully, that
there were indeed four options that could occur. I wanted to main-
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dress it up front with a sponsor and say dont even bother submit-
ting this.
I dont want to waste our review time, our resources. It takes one
medical officer on a priority review 6 months basically full-time,
and if you already know on a priority that there is a fatal flaw
here, why bother going through the mechanics of a review.
So I think in essence that there is a high degree of variability
from one division to another. For example, even on non-approval
letters, with some companies we may call them up once we have
reached that decision and say you have the option. Do you want
a non-approval letter or do you want to withdraw the application,
and here again there is not a consistent approach within the agen-
cy dealing with this, and I think it is a very important element
that needs to be addressed.
Mr. GREENWOOD. Dr. Keegan, do you want to say something?
Ms. KEEGAN. Yes. I would agree with Dr. Pazdur that if at the
time that we met with the company on a particular product that
we felt that there was no way that we were going to be able to ap-
provefor example, if we knew that the major end point of the
study, that the primary goal of the study had failed, and that they
had not shown what they had intended to show, we would tell a
company and that we considered this to be a negative study, that
they should not file it and they should not even attempt to submit
an application. I think the circumstances here are a little bit dif-
ferent, in that some of the flaws only became available to us as we
reviewed the application. And there is a difference in approach
here.
We have not to my knowledge in the Center for Biologics in our
office called up the sponsor and said we are going to refuse to file
this application. Do you want to withdraw.
I think we dont do that for several reasons and I cant speak to
all of them because we havent actually gone through a major dis-
cussion, but one consideration would be that such a phone call
might to some extent be considered coercive; to call up a company
and say do this, and if you dont withdraw, we are sending you this
letter. It is a consideration that some people might
Mr. GREENWOOD. I dont know. I think if someone said to me
that you can step off the scaffold, or we can pull the trap door, I
think I would like to exercise my options. The gentleman from
Michigan.
Mr. STUPAK. Well, thank you. Along those lines then, if ImClone
had the inclining that they might get an RTF, did they ever call
and ask can we withdraw our drug until we submit further docu-
mentation?
Ms. KEEGAN. I was never contacted with a request like that.
Mr. STUPAK. Was anyone?
Ms. KEEGAN. And I dont know of anyone who was.
Mr. STUPAK. And like the FDA, and instead of them taking the
positive approach, or however you want to look at it, the approach
that maybe you should withdraw, the company also could have re-
quested a withdrawal before that December 28 RTF came out, cor-
rect?
Mr. MILLS. I had advised them on December 4 that that was
their option, and reminded them that is an option that they can ex-
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for a relapse. And that may even save lives of people who are at
high risk for having a relapse after surgery.
So it is a glimmer of activity that needs to be further developed.
Mr. GREENWOOD. The gentlemans time has expired. The Chair
recognizes the gentleman from Kentucky, Mr. Fletcher, for 5 min-
utes.
Mr. FLETCHER. Thank you, Mr. Chairman. Let me certainly
thank all of you for coming. Dr. Pai-Scherf, you are currently the
medical review officer for Erbitux; is that right?
Mr. PAI-SCHERF. Thats correct.
Mr. FLETCHER. And when did you take that position?
Mr. PAI-SCHERF. July 15, 2001, the file was transferred to me.
Mr. FLETCHER. Okay. So you have been through this process
quite a bit. Now, as a medical review officer, what are your respon-
sibilities on overseeing this study and the approval process?
Mr. PAI-SCHERF. My responsibility is to review the clinical por-
tion of the BLA.
Mr. FLETCHER. Now, do you get ongoing reports back from these
studies? In other words, as the data comes through, I guess you
dont get all the data at once. Do you begin to get part of it?
Mr. PAI-SCHERF. The first portion of the clinical studies came in
early October, and the final piece came on December 3. So I started
my review in early October.
Mr. FLETCHER. And when did you really begin to see that, hey,
there are some problems here, or did you see that there were prob-
lems?
Mr. PAI-SCHERF. In a very early stage of my review, I noticed
some problems, and the first one is that we did not have docu-
mentation of the CT scan of the patients receiving irinotecan.
Mr. FLETCHER. So you could not document that they were non-
responders?
Mr. PAI-SCHERF. Yes. Yes, and that was the first piece and a
very important piece.
Mr. FLETCHER. And at what pointwell, who did you commu-
nicate that to?
Mr. PAI-SCHERF. With Dr. Lilly Lee.
Mr. FLETCHER. Dr. Lee with ImClone?
Mr. PAI-SCHERF. Yes.
Mr. FLETCHER. And that was reported that, hey, you have got
some real documentation. Did they report back to try to get the
documentation? Because that certainly looked to have a significant
impact on the refusal to file letter.
Mr. PAI-SCHERF. First she reported that there were 11 patients,
and she sent me a table stating that there were 11 patients who
were ordered to have a CAT scan, or the physician never ordered,
and felt that the patient progressed because of clinical judgment.
Mr. FLETCHER. And that is not adequate for your study at all.
I mean, just a clinicians feeling from clinical judgment that the
tumor has progressed is not an adequate data collection; is that
right?
Mr. PAI-SCHERF. Not for a clinical study supporting licensure, no.
Mr. FLETCHER. Okay. Thank you. In your communication were
you at a meeting with Dr. Lee on December 4 when she asked
whether the FDA was going to send an RTF letter?
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211
Mr. PAI-SCHERF. Dr. Lee was clearly concerned about all the
issues that we had raised at that point.
Mr. FLETCHER. Were you at that meeting?
Mr. PAI-SCHERF. Yes.
Mr. FLETCHER. And so you were at that meeting. Okay.
Mr. PAI-SCHERF. And she stated thatshe asked us if there
would be an RTF.
Mr. FLETCHER. And what did you say?
Mr. PAI-SCHERF. Dr. Mills answered the question, and I agreed
with what he said.
Mr. FLETCHER. Well, you had mentioned that earlier, but go
ahead.
Mr. MILLS. From the standpoint again that I offered the four op-
tions that were available, three of which were FDA, and one of
which was that I offered to ImClone that certainly they could with-
draw.
Mr. FLETCHER. Let me ask a question, and I guess it isI guess
this probably goes to Dr. Keegan, but if somebody else has a re-
sponsibility, dont hesitate to answer it.
We got testimony earlier from Mr. Bryan Markison that on De-
cember 25, of all days, Christmas, that he received a call from
someone, and I dont know that we got that individuals name. But
he received a call on December 25 that you all were likelywell,
not only likely, but that it was going to occur, that an RTF letter
would be issued.
And the letter that came out, or at least the one that I see, has
got stamped on it December 28. Now, what is the protocol here?
Who leaked the information, and is that normal to leak the infor-
mation, or is that okay to leak the information? It had tremendous
impact on the executives, and family, friends, and other folks who
ended up selling off a whole lot of stock based on that information.
Ms. KEEGAN. Well, as Dr. Pazdur says, we do have the option,
and in his center, he will actually inform a sponsor, a commercial
firm, that they would refuse to file the application ahead of issuing
the letter.
There is no prohibition against telling a company that you will
refuse to file their application. We did not choose to tell them that
definitely before we sent the letter, but there is no prohibition
against it.
Mr. FLETCHER. Given the fact, and I know that your area of ex-
pertise is not that of the SEC, or some of the other things, but
should there be something? As someone mentioned, there is no
standardization of communications to the companies, and Dr.
Pazdur, you may have made that statement.
Mr. PAZDUR. Correct.
Mr. FLETCHER. Should we have some standardization given the
impact of markets, the venture capital that is required in the de-
velopment of these, and obviously the number of investors involved
that were affected tremendously by this December 28 letter, and
some who used inside information to make a bundle?
Ms. KEEGAN. Well, I think how someone chooses to use the infor-
mation is not part of our procedure, and certainly any communica-
tion that we would provide, we would expect that the company
would use it responsibly, or the individuals who received that.
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AN INQUIRY INTO THE IMCLONE CANCER-
DRUG STORY
HOUSE OF REPRESENTATIVES,
COMMITTEE ON ENERGY AND COMMERCE,
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:10 a.m., in room
2123, Rayburn House Office Building, Hon. James C. Greenwood
(chairman) presiding.
Members present: Representatives Greenwood, Stearns,
Whitfield, Fletcher, Deutsch, Stupak, Strickland, and DeGette.
Staff present: Alan Slobodin, majority counsel; Anthony M.
Cooke, majority counsel; Will Carty, legislative clerk; and David
Nelson, minority Counsel.
Mr. GREENWOOD. The meeting will come to order.
Today the subcommittee continues its inquiry into the ImClone
cancer-drug story. The purpose of this hearing is to help this com-
mittee, as well as the public, understand the circumstances sur-
rounding the Food and Drug Administrations refusal to file the ap-
plication for Erbitux, a highly publicized cancer drug developed by
ImClone Systems, and how the cancer-drug approval system can be
improved.
Erbitux initially attracted national attention because it offered
new hope for seriously ill colon cancer patients; and because of the
premarket publicity about the drug, ImClones record-setting $2
billion alliance with Bristol-Myers Squibb to market Erbitux, the
controversy over the accuracy of ImClones public descriptions of
FDAs concerns in a nonpublic letter and multimillion dollar stock
trades by ImClone insiders in the weeks before FDAs negative de-
cision.
On June 12, Samuel Waksal, one of the founders of ImClone and
its former CEO, was arrested on a Federal criminal complaint for
insider tipping, attempted insider trading, and false statements. In
its complaint, the Federal Government alleged that members of
Samuel Waksals family had sold about $10 million worth of stock
on December 27, 2001, based on tips by Dr. Waksal the day before
the FDAs decision. Dr. Samuel Waksal himself allegedly attempted
to sell about $5 million worth of ImClone stock by initially gifting
the stock to one of his daughters and having her immediately sell
it.
At the subcommittees hearing on June 13, we heard testimony
from one of the committees investigators and the committee-re-
tained oncology consultant who reviewed some of the data and doc-
(215)
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218
ticularly for cancer patients and especially those making 400 tele-
phone calls to ImClone daily for compassionate-use access. The evi-
dence shows, in the months leading to the December 2001 rejec-
tion, ImClone management spent much of its time nailing down its
billion-dollar tender offer with Bristol-Myers, publicizing Erbitux,
making millions, but failing to provide the necessary quality con-
trol of the clinical package in its application.
At the same time, there appears to have been confusion and
miscommunication at FDA. Profits before patients and regulatory
incoherence is a betrayal of cancer patients and is at odds with the
Federal mission of promoting the public health. Through this ac-
counting of what happened at this hearing, it is my sincere hope
that this will enhance the publics confidence in the biotechnology
industry and the FDA, and produce a more efficient and effective
drug approval process.
I look forward to hearing from the witnesses and working in a
bipartisan fashion with my colleagues to produce a better cancer-
drug approval system for patients.
The Chair recognizes for purposes of an opening statement the
ranking member, the gentleman from Florida, Mr. Deutsch.
[The prepared statement of Hon. James C. Greenwood follows:
PREPARED STATEMENT OF HON. JAMES C. GREENWOOD, CHAIRMAN, SUBCOMMITTEE
ON OVERSIGHT AND INVESTIGATIONS
Today the subcommittee continues its inquiry into the ImClone cancer-drug story.
The purpose of this hearing is to help this committee as well as the public under-
stand the circumstances surrounding the Food and Drug Administrations (FDA) re-
fusal to file the application for Erbitux, a highly publicized cancer drug developed
by ImClone systems, and how the cancer-drug approval system can be improved.
Erbitux initially attracted national attention because it offered new hope for seri-
ously ill colon-cancer patients and because of the pre-market publicity about the
drug, ImClones record-setting $2 billion alliance with Bristol-Myers Squibb to mar-
ket Erbitux, the controversy over the accuracy of ImClones public descriptions of
FDAs concerns in a non-public letter, and multi-million dollar stock trades by
ImClone insiders in the weeks before FDAs negative decision. On June 12th, Sam-
uel Waksal, one of the founders of ImClone and its former CEO, was arrested on
a federal criminal complaint for insider tipping, attempted insider trading, and false
statements. In its complaint, the federal government alleged that members of Sam-
uel Waksals family had sold about $10 million worth of stock on December 27, 2001
based on tips by Dr. Waksal, the day before the FDAs decision. Dr. Samuel Waksal
himself allegedly attempted to sell about $5 million worth of ImClone stock by ini-
tially gifting the stock to one of his daughters and having her immediately sell it.
At the subcommittees hearing on June 13th, we heard testimony from one of the
committees investigators and a committee-retained oncology consultant who re-
viewed some of the data and documentation from the key study on Erbitux. In addi-
tion, Dr. Samuel Waksal appeared and exercised his constitutional right not to tes-
tify. We heard testimony from witnesses from ImClone systems, Bristol-Myers
Squibb, and the FDA. Some of the key findings from this hearing were:
The primary FDA medical reviewer handling the Erbitux matter did not believe
that ImClones key study met the criteria for accelerated approval and fast-
track designation. However, at a meeting between FDA and ImClone in August
2000, the senior FDA medical official in effect overruled the primary medical
reviewer and said the protocol design was probably acceptable.
The senior FDA official testified that she believed she was misled by ImClone
about its claim that a human clinical trial showed that Erbitux had no activity
when used alone.
FDA granted fast-track designation to ImClones Erbitux based on the wrong
version of the protocol for the key study and was made before the agency had
the single-agent data on Erbitux.
ImClone testified that its officials believed that FDA had accepted the protocol de-
sign, that FDA had the correct protocol version, and that they were not led to
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219
believe that any of the documentation problems and flaws in the studies would
actually result in FDA refusing to file the Erbitux application.
On December 24th, a law firm retained by Bristol-Myers obtained information
from an FDA source that confirmed ImClone would receive a refusal-to-file let-
ter. This information in turn was passed to Harlan Waksal, the then chief oper-
ating officer at ImClone, on December 25th.
On December 28, 2001, FDA sent ImClone the refusal-to-file letter on the Erbitux
application.
In subsequent days, Samuel and Harlan Waksal portrayed the reasons for FDAs
refusal-to-file letter as based on lack of proper documentation. However, ex-
cerpts of the refusal-to-file letter appeared in a trade publication that showed
that FDAs concerns were more serious than just missing documentation and in
fact raised serious questions about whether ImClone would have to obtain addi-
tional data from other pre-existing studies or conduct new studies in order to
get approval.
The committees oncology consultant testified that there were serious problems in
the key study, including high rates of patient ineligibility and waivers. In addi-
tion, Bristol-Myers independent radiology review showed that strict scrutiny of
the study data yielded only a response rate of 12.5%, less than ImClones 15%
goal and much less than the 22.5% response rate presented to the public.
Testimony from the FDA officials showed inconsistent approaches on drug product
applications and interactions with companies between FDAs center for biologics
and FDAs center for drugs.
Since the June 13th hearing, there have been a number of major developments
reported:
On June 19th, ImClone systems received a wells notice from the Securities and
Exchange Commission (SEC) that appears to indicate that the SEC staff is con-
sidering recommending the commission bring an action against ImClone relat-
ing to the companys disclosure immediately following its receipt of the refusal-
to-file letter on December 28th.
Besides Samuel Waksal and members of his immediate family, other individuals,
notably Martha Stewart, have emerged as subjects of investigation for conduct
related to trading of ImClone stock immediately before the FDA letter was
issued. With respect to Ms. Stewart, the committee on September 10th sent a
bipartisan letter to the attorney general requesting his consideration of con-
cerns and information related to statements that Ms. Stewart caused to be
made to the committee concerning her trade of ImClone stock.
In August, a federal grand jury in New York indicted Samuel Waksal on 13 felony
counts, including obstruction of justice and bank fraud. Dr. Waksal has pleaded
not guilty to these charges.
A few days later, ImClone systems sued Samuel Waksal for breach of contract and
for breach of fiduciary duty based on the companys belief that Dr. Waksal false-
ly affirmed that he was cooperating with the federal investigations.
FDA granted accelerated approval to a colon cancer drug called Eloxatin. The ap-
proval was noteworthy for two reasons: the drug was finally available in the
U.S. after being on the market for years in over 50 countries and the company
gained approval by conducting a three-arm randomized trial in less than 2
years with FDA approving the application in 46 days.
An FDA advisory committee recommended approvability for Astra-Zenecas Iressa
based on a 10% response rate where the drug was used alone in seriously ill
cancer patients who had few if any alternatives.
These new developments and additional information obtained by the committee
provide the subcommittee with reasons to continue this inquiry and discussion with
todays witnesses. For example, the committee has learned ImClone insiders sold
244 million dollars in ImClone stock in the two months before the FDA rejection,
and the volume of options trading of ImClone on December 27th and December 28th
was unusually high.
The subcommittee is encouraged by FDAs reorganization but still has questions
about how the FDA envisions improving the approval process for cancer drugs. We
will also want to hear the FDAs views on the adequacy of its law and procedures
on dealing with misleading pre-market statements by industry officials to patients
and the investing public about data or events contained in confidential FDA meet-
ings and documents. The subcommittee remains interested in discussing drug-ap-
proval issues with ImClone, but in addition the subcommittee will also want to dis-
cuss issues bearing on corporate governance. For example, ImClones legal depart-
ment told the committee staff that it discovered that Samuel Waksal had forged the
signature of ImClones general counsel on a document certifying Samuel Waksal
owned stock warrants that he no longer had. We have also learned that Samuel and
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220
Harlan Waksal purchased shredders in January shortly after Sam received a phone
call from an SEC investigator. Many aspects of Samuel Waksals financial problems
and past professional record have come to light. We will want to learn what
ImClones board and management knew about these issues, when, and how these
decisionmakers responded.
As the committee continues its inquiry, the picture comes into sharper focus. The
ImClone-Erbitux is truly a tragedy, particularly for cancer patients, and especially
those making 400 telephone calls to ImClone daily for compassionate-use access.
The evidence shows in the months leading to the December 2001 rejection, ImClone
management spent much of its time nailing down its billion-dollar tender offer with
Bristol-Myers, publicizing Erbitux, making millions, but failing to provide the nec-
essary quality-control of the clinical package in its application. At the same time,
there appears to have been confusion and miscommunication at FDA. Profits before
patients and regulatory incoherence is a betrayal of cancer patients and is at odds
with the federal mission of promoting the public health. Through this accounting
of what happened at this hearing, it is my sincere hope that this will enhance the
publics confidence in the biotechnology industry and the FDA, and produce a more
efficient and effective drug approval system.
I look forward to hearing from the witnesses and working in a bipartisan fashion
with my colleagues to produce a better cancer-drug approval system for patients.
Mr. DEUTSCH. Thank you, Mr. Chairman. We have two separate
panels today, and I think they highlight the two separate trends
in our hearings and our investigation.
First, with the head, acting head of the FDA, I think were
herewe will hear an excellent story of really an agency and Con-
gress working very well together, and our staffs, both of our staffs,
really doing the work of this subcommittee, really its investigative
arm that I think we are so well known and so talented about. And
that isin fact, my understanding is that the FDA has or is in the
process of changing its review procedure for human organism drugs
to basicallyback to the Center for Drug Evaluation from the Cen-
ter for Biologics. And from all of our understandings, one of the
problems of the Erbitux was really a problema procedural prob-
lem in a sense in terms of the expertise within those two parts of
the FDA.
Clearly, there are challenges in that animal studies are different
for biologics and chemicals in terms of preclinical trials, but I think
our best assessment, as well as the agencys best assessment, is
that this review potentially has some very dramatic, positive effects
for all Americans and, in fact, all people throughout the world; and
so Im very proud of the work that weve done in a very bipartisan,
workmanlike fashion, doing our job.
The second part of the hearing is, I guess, more a step forward
in a sense, in our continuing look at some of the corporate disasters
that have occurred and looking both at specifics and then system-
atic issues. I hope that we will focus on systematic issues today,
and I think there are some that are clearly there.
In this case, I think the largest focus is really the role of board
of directors, in a case where their judgment, in terms of independ-
ence, is very much open to question. I specificallythere will be
many questions that will come up this morning, but with all that
the board knew in terms of Sam Waksals actions, includingmy
understanding is the general counsel whose signature was forged
will be herewith all of that information available to the board,
the fact that the board still did not seek to remove him even at oth-
ers suggestionobviously issues about some of the consulting rela-
tionships with the board, really, and the independence.
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decision to not bring the SAB together, was made because some on the Board were
too close to the clinical trials and Erbitux itself to make unclouded judgements
about what were best practices in order to achieve a study void of design and con-
duct flaws.
At our last hearing, I wanted to make sure that FDA was doing the best job pos-
sible to balance these two issues. I still believe we must continue our conversations
with the FDA, but I am pleased to see the FDA making some positive changes that
will help balance safety and effectiveness. I hope that we can continue to work with
FDA to develop policy that allows these new technologies to be available to patients
as quickly and safely as possible.
Equally as important, we must look at corporate governance issues such as CEO
misconduct, the ImClone insider trading policy, conflicts of interest within the
Board and management, and changes in corporate policies made in 2002 in response
to this Committees inquiries, the media attention, and enactment of the Oxley-Sar-
banes Act.
It is my hope that many new cancer treatments, including Erbitux can be ap-
proved for marketing as quickly and safely as possible. It is FDAs responsibility to
maintain the Gold Standard of safety. ImClone needs to recognize that they must
not only work to ensure that Erbitux is approved, but also that is safe and effective
according to the FDAs standards.
Again, I thank the Chairman for holding this hearing today.
Mr. GREENWOOD. The gentlelady from Colorado is recognized for
an opening statement.
Ms. DEGETTE. Thank you, Mr. Chairman. Just to say briefly, Id
like to commend you on holding this hearing today.
Like the other members, Ive been quite concerned for some time
about what the role of corporate boards has been in all of our in-
vestigations on corporate responsibility. And what weve seen over
the last year during the hearings of this subcommittee, which have
been incredibly productive, weve seen throughout the economy,
every industry, from energy to telecommunications to pharma-
ceuticals; corporate officers, corporate employees almost running
rampant with the resources of the company, and the boards just
standing by and rubber-stamping whatever these employees want-
ed to do.
I think that our continuing investigation into board activities and
board accountability will be greatly helped by our hearing today,
and I just want to thank you for really refocusing this committees
efforts with respect to ImClone on the board activities and also the
FDA approval process. I think it will yield a lot of evidence as we
move forward to decide what, if any, additional legislation Con-
gress needs to examine to improve the system.
And I yield back the balance of my time.
Mr. GREENWOOD. The Chair thanks the gentlelady.
The gentleman from Florida, Mr. Stearns.
Mr. STEARNS. Thank you, Mr. Chairman, and I commend you for
this hearing.
I think many of us have either been on television or heard from
the news media. They always ask the question: Congress doesnt
need to aggressively inquire into these cases of corporate govern-
ance; why dont we just turn these over to the Department of Jus-
tice? Why dont we turn them over to the Federal Trade Commis-
sion? And my response is that we do have a responsibility here in
Congress. We make the laws, both on drug approval and securities
trading, and therefore we need to be informed of examples where
events do not proceed as the law intended, because we are making
the laws here.
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Mr. Chairman, thank you for holding this follow-up hearing today. On August 25,
I was interviewed on MSNBC News, and the reporter asked me didnt I feel that
Congress doesnt need to aggressively inquire into cases of corporate governance,
that we should just turn these over to the DOJs antitrust lawyers and the FTC.
My response was, and is, that we in Congress make the laws on both drug approval
and securities trading, and therefore we need to be informed of examples where
events do not proceed as the law intended. And so here we are again.
One of my grievances at the last hearing was how while ImClone was hyping
Erbitux on 60 Minutes, and the cover of Business Week, the FDAs hands were
tied in not correcting any exaggerated claims made in these features. And rightly
so: their role is not as watchdog of the media. I am especially pleased, therefore,
that today we will hear from the FDA on Federal Trade Secrecy laws, and how they
might be permitted to communicate with the SEC in such cases where stock price
may be affected.
Further, I am glad this Committee will again examine corporate governance
issues: how directors of companies abuse company debt, get interest-free loans, and
the like. For the system of capitalism to work, where the general public invests in
private ventures for the betterment of themselves, of the economy, and in the case
of a biotech company, the betterment of patients, there needs to exist complete
transparency and integrity in a companys operations. Shady executive practices
lead to damaging effects rippling through the economy: Integrity is the elixir that
will attract capital and lead to lifesaving innovation, while deceit is the poison that
is eroding investor confidence. Thank you.
Mr. GREENWOOD. The Chair thanks the gentleman.
The gentleman from Ohio, Mr. Strickland, for an opening state-
ment.
Mr. STRICKLAND. Mr. Chairman, I would like to enter my state-
ment into the record, and I would like to yield my time to Mr. Stu-
pak who has an opening statement.
Mr. GREENWOOD. The gentleman from Michigan is recognized to
make an opening statement.
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Mr. Chairman, we are here today to continue our investigation of the ImClone/
Erbitux disaster.
I am pleased we are taking up two very important aspects of this fiasco: how the
FDA conducts its drug and biologic approvals, and how ImClone as a company failed
its investors.
On June 13, 2002 we had a hearing on ImClone, and I questioned Dr. Frank
Papineau, an investigator for this committee and a witness at the hearing, about
how FDA could have let ImClone make such exaggerated claims about its drug,
Erbitux.
I asked him how it was that the FDA did not take steps to publicly correct these
misstatements. He replied that FDA officials were aware of these misstatements but
could not do anything because of the secrecythe trade secrets and stuff of drug
applications.
He went on to say that the FDA officials saw the 60 Minutes story, the USA
Today story, and the Business Week cover story, and still could not say anything.
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When I brought up this point to Pat Keegan, the officer who overruled her own
staff and allowed the Erbitux application to go forward, she found it amusing and
laughed. I do not think this is any laughing matter.Well, this is just wrong. I fail
to see how trade secrets are exposed by a simple rebuttal of claims, or at the very
least a statement of caution to the public from the FDA.
I have great reservations about how the FDA handles drug and biologic approvals,
and I am not sure that switching over the biologics approval to the Centers for Drug
Evaluation will work. I will withhold judgment on that.
Today, we are also looking at how the senior officers and board members of
ImClone may have worked the system in their favor at the expense of their share-
holders.
It appears we have a classic case of corporate malfeasance, although further in-
vestigation is ongoing.
What Iand the shareholders who got the short end of the stickwant to know
is, What happened?
What we do know at this point is that top officers sold large amounts of stock
after privately receiving bad news. Stock prices plunged.
It seems as though certain people may have treated this publicly-owned company
as a privately-owned piggybank.
I hope this is not what happened.
Perhaps shareholders would have had more recourse if those in Congress didnt
strip away their rights in 1995 as part of the Contract on America.
The Private Securities Litigation Reform Act, or PSLRA, stripped away share-
holders rights and virtually eliminated deterrence.
It created a permissive legal environment where the threat of lawsuits were re-
moved and the loser pays.
PSLRA should be repealed, and I request the support of my colleagues for my bill
that would do just that, H.R. 3829.
Mr. Chairman, I yield back the balance of my time.
Mr. DEUTSCH. Mr. Chairman, I have a statement from the rank-
ing member of the full committee, Mr. Dingell.
Mr. GREENWOOD. Without objection, Mr. Dingells statement will
be made a part of the record.
[The prepared statement of Hon. John D. Dingell follows:]
PREPARED STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF MICHIGAN
Mr. Chairman, thank you for holding this hearing. As our first ImClone hearing
and reports in the press have revealed, this company belongs in the infamous pan-
theon of firms whose executives have been allowed to treat publicly traded busi-
nesses as their own personal cookie jar. Apparently the ImClone Board of Directors,
like many others, has been content to take their fees while at best turning a blind
eye to abuses that were occurring under their very noses.
This investigation, however, has also addressed another issue of at least equal im-
portance to corporate misdeedsthe efficiency and fairness in the expedited ap-
proval process at the Food and Drug Administration (FDA) for drugs to treat ill-
nesses, often life threatening, for which no alternative treatment regime exists.
Congress enacted a process that expedites new experimental treatments to the
market in record time, based on very little evidence of effectiveness. Even under
these very lax procedures, ImClone was unable or unwilling to undertake the re-
search necessary to make the necessary showing of possible efficacy.
This hurt colorectal cancer patients for whom this drug was the last hope. No
drug currently on the market as a treatment for colorectal cancer is much better
from a placebo. Even ImClone only claimed its drug, in combination with a chemo-
therapy agent, shrunk tumors, not actually extended life but shrunk tumors, in less
than a quarter of the 120 patients in the study. Analysis of the data by Bristol Mey-
ers put that number at less than 13 percent. The Waksals raised false hopes, and
stole the hope that did exist, from those suffering, or whose loved ones are suffering,
from this terrible disease.
It appears that the FDA has taken a positive step in the direction of a more ra-
tional, consistent approach to expedite these applications. When the reorganization
that transfers all drug reviews to the Center for Drugs is complete, all applicants
should realize that if they hope to get small Phase II studies considered for early
approval, that the science behind those limited studies will have to exhibit the kind
of rigor that Dr. Pazdur advocated at our last ImClone hearing.
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While this proposed transfer of authority holds the promise of consistency and
good science as the heart of expedited consideration, the devil remains as always
in the details. Congress, and particularly this Subcommittee, will need to watch
carefully. Will needed expertise be transferred? Will bureaucratic delay and uncer-
tainty cause FDA to lose important scientific expertise? Will employee rights be re-
spected? This transfer must be done right, or FDA may make matters worse.
Mr. GREENWOOD. We have just over 7 minutes left in this vote,
so the committee will recess and return immediately after the vote.
[Additional statement submitted for the record follows:]
PREPARED STATEMENT OF HON. W.J. BILLY TAUZIN, CHAIRMAN, COMMITTEE ON
ENERGY AND COMMERCE
Mr. Chairman, thank you and let me commend you and the staff on both sides
of the aisle once again for the path-breaking work in this ImClone investigation.
There is so much more to this than people just following the news stories over the
summer may realize.
Ultimately, this investigation comes down to doing whats right for cancer pa-
tients. By exposing the problems that occurred with ImClones Erbitux and the
FDA, you are helping to point the way for us to improve the drug-approval system
to make it work better for these and other patients desperately hoping for break-
through treatments.
So with all the attention on insider trading and corporate governancesubjects
we will take on today as they relate to the problems herethe public should not
forget that potential flaws in FDAs drug approval process have been at the center
of this investigation all along.
These flaws allowed a study of questionable quality to become the basis for fast-
track application. They allowed irresponsible hyping of a promising drug as FDA si-
lently stood bythus raising and dashing hopes of thousands of cancer patients.
I am encouraged that since the June ImClone hearing, the FDA has reorganized
pharmaceutical product reviews to enhance consistency and performance. This is a
good first step and we are very interested to learn how FDA envisions this reorga-
nization will improve the drug-approval system, especially for cancer drugs. I wel-
come Dr. Lester Crawford, FDAs Deputy Commissioner, who can discuss this for
us.
Theres clearly room for improvement. We know this from FDAs own work. Con-
sider Eloxatin. This colon-cancer drug was approved on an accelerated basis by
FDAs Center for Drugs on August 12, 2002, within 46 days of submissiona new
FDA record. And it was approved based on an interim analysis of a Phase III ran-
domized triala trial that measures actual patient survivalinstead of less reliable
Phase II study-data on surrogate endpoints, which had been the basis for past accel-
erated-approvals and were the basis for ImClones application.
Eloxatin shows a company can get accelerated approval just as fast as ImClone
had hoped its drug would be approved, and with better data. Perhaps the Eloxatin
case can be a useful model for the future. It clearly suggests that ImClones experi-
ence might have been different, if there had been better communication between
FDA and ImClone.
I understand that FDA is working on a communications policy that is aimed at
improving interactions between the agency and the companies it regulates. This is
encouraging and I am hopeful that FDA is moving in a constructive direction.
I look forward to hearing about FDAs views on pre-market promotion or pre-mar-
ket statementsa topic that also gets to ImClones actions and governance. This as-
pect of the ImClone story is essential to our inquiry.
We now understand that ImClone directors and officers reaped millions from the
sale of ImClone stock before FDAs refusal-to-file letter. Cancer patients, of course,
got their hopes dashed. And what did many ImClone shareholders get from the re-
jection of Erbitux? An 88% reduction in share price, delay in the development of
Erbitux, a CEOSam Waksalwho resigned and then was arrested and indicted.
ImClone Systems has now sued Sam Waksal because it believes he did not cooper-
ate with the federal investigations while he affirmed to the company that he was
cooperating.
Yet we have now learned that for years ImClone did not trust Sam Waksal with
the companys corporate credit card. It actually installed special procedures to en-
sure he did not charge the company for his personal expenses.
Why would ImClone management have trusted Dr. Waksal?
The media have already reported his financial problems, and his past firings for
allegedly misleading and even falsified scientific work. Fortune reports that, over
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the past 20 years, dozens of lawsuits and tax liens have been filed against Waksal
by the IRS, New York State, American Express, banks and brokers, art galleries,
contractors, and individuals.
Are we to believe that ImClone management was totally unaware of these issues?
Did the Board and management act properly in light of these red flags? We will be
interested to hear from the ImClone witnesses on these questions and others sur-
rounding the rejection of Erbitux.
Mr. Chairman, it is my hope that, from this investigation, we will see an im-
proved drug-approval systemwhere the public has confidence in the companies,
the FDA and the companies are clearly communicating with each other, and drug-
studies are conducted properly to provide information that will optimize the chances
for approval, so patients can be helped.
Thank you, Mr. Chairman.
[Brief recess.]
Mr. GREENWOOD. The committee will come to order. The Chair
apologizes for the delay.
And we welcome Dr. Crawford. Thank you for being with us. And
I think youre aware that this committee is holding an investigative
hearing, and when we hold investigative hearings, we take testi-
mony under oath.
Do you have any objections to giving your testimony under oath?
Mr. CRAWFORD. None whatsoever.
Mr. GREENWOOD. I also should advise you that pursuant to the
rues of this committee and the House, you are entitled to be rep-
resented by counsel.
Do you choose to be represented by counsel this morning?
Mr. CRAWFORD. Not at this time.
Mr. GREENWOOD. Okay. If it gets dicey and you need a lawyer,
just let us know.
Mr. CRAWFORD. We have some waiting in the wings, Mr. Chair-
man.
Mr. GREENWOOD. All right. In that case, if you would stand and
raise your right hand.
[Witness sworn.]
Mr. GREENWOOD. You are under oath, and recognized to make
your statement.
TESTIMONY OF HON. LESTER M. CRAWFORD, DEPUTY
COMMISSIONER, FOOD AND DRUG ADMINISTRATION
Mr. CRAWFORD. Mr. Chairman and members of the sub-
committee, I am Les Crawford, Deputy Commissioner of the Food
and Drug Administration. I appreciate the opportunity to address
the committees questions about the agencys communications pol-
icy.
The recent announcement of a plan to transfer responsibility for
the premarket review of certain therapeutic biological products
from our Center for Biologics Evaluation and Research (CBER) to
our Center for Drug Evaluation and Research (CDER) and the
agencys authority to police the marketplace for false or misleading
statements made by companies about their products that are being
reviewed by FDA prior to marketing.
In conjunction with the June 2002 reauthorization of the Pre-
scription Drug User Fee Act of 1992, FDA agreed to meet specific
performance goals. Under the PDUFA goals, as they are called,
CBER and CDER agreed to draft a joint guidance for the agency
and industry on how we define good review management principles
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ters say to the industries that are sponsoring these products, but
also from reviewer to reviewer, what is said. And that is a result
of this committees interest and actions and also this letter.
So that will be proceeding apace, we expect, in a very short time,
perhaps by the end of the year, that we will have this package out
for comment.
We will give a reasonable amount of time for comment, and it
also will be submitted to this committee for any action you would
like to take, including further meetings with the subcommittees of
FDA personnel, including myself and the new commissioner; and
we would like to work with the committee on making sure that we
refine these practices.
I think its worth noting that there have always been commonly
understood mechanisms and techniques that FDA will use to com-
municate with the industry. I think it is axiomatic that we have
to communicate throughout the review process, because we have to
ask them for more information, and they have to
Mr. GREENWOOD. Lets get right to the ImClone case here, be-
cause a number of lay people have said to me, isnt this awful that
the FDA leaked this information out that caused the panic at
ImClone and the insider trading and so forth? And my response is
actually a little different than they expect, because Ive been push-
ing since the mid-90s for more and more transparency at the FDA.
It seems to me that if I look at this particular case, when Ms.
Lee was in the FDAs office inI think it was December 4at that
time, the FDA reviewers with whom she was meeting knew that
they had or were about to make a recommendation to their superi-
ors to issue a refusal-to-file letter, and yet that information was not
shared with her. And, in fact, there was a lack of transparency
from that point forward, except for the fact that the Bristol-Myers
lobbyist was able to worm his way in and get some information.
And so it seems to me that cases like that in FDA would be bet-
ter offthe patients would be better off, the companies would be
better off with maximum transparency, so that if companiesso
that conversation might have happened where the FDA said, look,
weve got some seriouswe have some serious problems with your
study here. These are what those problems are, and were inclined
to recommend a refusal to file. You should know this. You may
want to withdraw your application and do some more work and
come back to us, and that might have prevented this very precipi-
tous issue.
How would you respond to that?
Mr. CRAWFORD. Well, I think a couple things, based on that case.
One is, we believeand its memorialized in these draft guid-
ances that were trying to get together as quickly as possiblethat
the result of the FDA review should be committed to writing. There
should be a letter that can change hands, because there were many
different interpretations of what was said and who said what, et
cetera, et cetera.
So we are moving toward vesting in the division director the re-
quirement that when the decision has been made, to hand out this
written statement and I believe that will make for a lot of progress.
Mr. GREENWOOD. Well, but again, thats when a decision has
been made.
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Mr. CRAWFORD. I did meet with the two consultants once within
a few days of my arrival.
Mr. DEUTSCH. And again, you dont recall their names.
Mr. CRAWFORD. I can get those for you.
Mr. DEUTSCH. All right. Thats fine. Okay. Throughout the
PDUFA reorganization process, FDA repeatedly reminded the Con-
gress that the failure to act well in advance of the September 30
sunset would result in FDA losing a very large investment in
human capital as reviewers with expertise leave in the face of un-
certainty. What steps has the agency taken to assure that the re-
viewers will have continuing employment under comparable condi-
tions after this reorganization?
Mr. CRAWFORD. Well, actually, several things bothsome before
and some after the decision. One is that PDUFA itself in the early
passage gave assurance to people who would be involved in this re-
view process that there would be funds enough to keep them on
board. As you may recall from the PDUFA hearing, we were con-
cerned that we would have to begin laying off people if we couldnt
get the decision before August, or that is late in this legislative
year. Since that time we have identified key personnel that may be
leaving, and we have the authority now to offer them incentives to
stay, that is monetary incentives to adjust their salaries, and then
I get a weekly report on movement of personnel and I attempt to
be very careful about unusual changes.
So far we have notonce PDUFA was signed and presented, we
have had very few losses.
Mr. DEUTSCH. Okay. I understand what you just said. I am told
that Dr. Zoon has said that she is already losing top people. Would
you say that is not accurate, inaccurate or maybe not to your
knowledge at this point?
Mr. CRAWFORD. There havent been any unusual losses. FDA has
an annual turnover rate of about 8 percent, and the record shows
thats continuing.
Mr. DEUTSCH. Okay. Thank you. Thank you, Mr. Chairman.
Mr. GREENWOOD. The gentleman from Florida is recognized for
10 minutes.
Mr. STEARNS. I thank the chairman.
Dr. Crawford, when ImClone was hyping theirthe drug
Erbitux, Erbitux, were you familiar with their hyping? Did you
know of their hyping?
Mr. CRAWFORD. Unfortunately, Mr. Stearns, I was not there at
the time.
Mr. STEARNS. Okay. Did your predecessor know of it? Did he ever
say to you boy, these folks are really hyping this drug.
Mr. CRAWFORD. I didnt come until late February, so I would not
have had any interaction. I did talk to my predecessor about the
major items that were developing and had developed during the
year that he had been acting commissioner and that subject did not
come out.
Mr. STEARNS. So nobody in the FDA ever talked about ImClone
hyping the drug Erbitux?
Mr. CRAWFORD. They did not talk to me about it no.
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Mr. STEARNS. They did not talk to you. And you had noto your
knowledge, you had no awareness that there was hyping going on
at ImClone?
Mr. CRAWFORD. Well, had I been there, I may have known about
it. But I wasnt there.
Mr. STEARNS. No, I mean after you were appointed and once you
were there, no one ever talked to you about it? It was never a sub-
ject and no one said, you know, as a result of this, we should do
some new procedures.
Mr. CRAWFORD. Actually, I believe that the procedures that I dis-
cussed earlier may have emanated from that, and I have reason to
believe that they did. Im justyou know, there was no specific
conversation where someone said to me, because of that incident
we need to push these forward. However, I do believe that the pro-
cedures that are now in draft form will help and I think they are
part of that. I dont dispute that at all.
Mr. STEARNS. Yeah. What Im trying to establish with this line
of questioning is that the new procedure established because of
ImClones hyping the drug, one of the reasons these procedures
have been established. Do you think thats fair to say?
Mr. CRAWFORD. It would be surprising to me if that was not the
case, yes.
Mr. STEARNS. Okay. Once the FDA is doing their pre-new drug
application, they meet with a drug company and get an opportunity
to sell the agency, you know, the company meets with you folks
and has an opportunity to sell you on it in the pre-new drug appli-
cation. But after the application is submitted, explain to me the op-
portunities that they have for face-to-face meetings with the com-
pany. Okay.
Mr. CRAWFORD. Well, theywe hope they sell through science, I
mean its a form of selling, but we do, from the very beginning,
have an understanding with them of what will be expected in order
to get the claims that theyre seeking. It has to be first a decision
about what the drug will be used for and what the claims will be.
Their opportunity to meet with FDA is unfettered. Prior to the Pre-
scription Drug User Fee Act, I am told that that was a problem in
terms of resources. But the passage of PDUFA and the utilization
of some of those funds for this activity has improved that remark-
ably. So I dont believe anyone is being denied a meeting. There are
a great number of meetings, and we can provide that for the record
if you like.
Mr. STEARNS. I guess what were trying to also establish on this
committee is sort of the vision for improving the whole approval
process for cancer drugs. I mean, ImClone is one example, but
were trying to put in place procedures so that these things are ex-
pedited. You know, and lots of us feel that the FDA sometimes
moves slowly on this process. Do you think that theres a way to
expedite this anyway if we have more face-to-face meetings be-
tween the company and the FDA? I mean, alland a little bit in
ImClones defense, they want to know whats going on. They dont
know whats going on. They want to, you know, theyre sitting
there waiting and waiting and waiting. Obviously, they shouldnt
have been hyping it. But on the other hand, at the same time more
FDA face-to-face meetings would have been helpful.
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could just, as we put it, fall in off the street and come by and see
you and those meetings were better described as lobbying meetings
than scientific interchange meetings.
So weve come a long way since then. There has to be some order
in the process. But meeting with the reviewers is the right that the
companies have and should expect to exercise.
Mr. GREENWOOD. Okay. And that sounds like the right policy to
me. The Chair recognizes the gentleman from Michigan, Mr. Stu-
pak for 10 minutes. And let me announce so that everyone knows
whats going on. I know you have scheduling issues. At the conclu-
sion of Mr. Stupaks time, oh and Mr. Whitfield is here. And if he
has questions at the conclusion we will break until at least 1 for
lunch and then well take panel two.
Mr. Stupak.
Mr. STUPAK. Thank you, Mr. Chairman. I apologize. I missed
most of this hearing. Ive been over in the Senate and I appreciate
the chairmans indulgence, and hopefully none of my questions are
redundant.
Dr. Crawford, you said in your statement that it is not the FDAs
responsibility to correct false and misleading statements to the
public by a drug sponsor. Rather, you state its the SECs responsi-
bility to do this. Do you, or have you communicated your concerns
with the SEC?
Mr. CRAWFORD. Yes. In preparation for this hearing, I asked of
our Office of Chief Counsel to give me an understanding of how fre-
quent and how productive our communication was with the Securi-
ties and Exchange Commission and on the productivity scale, its
reported to me that it is very productive, that these are actually
two executive branch agencies that interact well with each other.
Their frequency of contact is daily on both sides. They initiate con-
tact with FDA on subject matter areas, and we initiate them also.
So its working.
Mr. STUPAK. But what about specifically on false, misleading
statements where the SEC should step in? And has those commu-
nications been since the last hearing, which was, I believe, in June?
Mr. CRAWFORD. Yes. Weve had those kinds of communications
with them. I can give you some statement of how many, if you
would like for the record.
Mr. STUPAK. Well, at these communications have you come up
with any kind of solution on how youre going to resolve this situa-
tion?
Mr. CRAWFORD. We have. We havewere developing a document
called the Good Review Practices Document, which does address
this issue and werewere going to put it out forwere going to
supply it to the committee and also going to put it out for public
comment. Its infairly far along in development, and well have
that done by the end of the year. And it will address this so as to
routinize these kinds of interchanges. It will also routinize other
things, like how reviewers interact with the sponsoring drug and
biologics firms likewise.
Mr. STUPAK. Okay. You also stated, I believe, in your statement
that the FDA currently does have authority to correct
misstatements. What kind of situation would lead to the FDA to
step in or take an active role in correcting misstatements? In other
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words, what would it take for the FDA to step in? I mean, here we
had a drug that was called the miracle drug in Business Week, I
believe, 60 Minutes. In fact, I think in the June testimony, some
of the FDA people said they were appalled at some of the state-
ments being made, but yet they said and did nothing. So what does
it take?
Mr. CRAWFORD. You mean, in the pre-approval timeframe before
its on the market?
Mr. STUPAK. Sure.
Mr. CRAWFORD. What we can do, obviously SEC reference is one
thing. But FDA also has authority to do the following things, and
we have done these in instances in the past and up to the present.
And that is, we arewe send to a company thats making egre-
gious claims in the pre-approval era period whats called an unti-
tled letter. And in those letters, we indicate what we find unaccept-
able about the issuances that theyre putting out, and we also call
upon them to cease and desist doing that. If the untitled letter does
not bring relief, then we go, at some stage, to whats called a warn-
ing letter. And the warning letter informs them that their behavior
is unacceptable and could result in the suspension of the review
process for the product thats under consideration.
Mr. STUPAK. In the matter before us, Erbitux, did anyone send
an untitled letter?
Mr. CRAWFORD. I was not at the agency at that time. But let me
check. Imwere not aware of one.
Mr. STUPAK. So in this case, basically, despite the claims and
people were appalled from the FDA, nothing was really done on
this one then, right?
Mr. CRAWFORD. Were not aware of that being done, no.
Mr. STUPAK. Okay. When you do these untitled letters, with a
cease and desist order or statement, whatever you want to call it
in the untitled letter, do you inform the public of it?
Mr. CRAWFORD. Those are available under the Freedom of Infor-
mation Act. We dont normally do that.
Mr. STUPAK. But the people would have no way of knowing.
Mr. CRAWFORD. We do not suppress that information.
Mr. STUPAK. Sure, if someone asked for it.
Mr. CRAWFORD. Asked for it.
Mr. STUPAK. But the public probably didnt know to ask for it
until today.
Mr. CRAWFORD. Im informed that our new policy that has been
developed is that we post them on the Web site. Now, we dont tell
people though that theyre on the Web site. You have to look on the
Web site.
Mr. STUPAK. So when you post it on the Web site, you dont put
out a press release or anything like that?
Mr. CRAWFORD. No.
Mr. STUPAK. Okay. And again, posting on the Web site is that
post June 2002, after our last hearing?
Mr. CRAWFORD. Actually, were trying to go electronic and I think
thatthats been done since about 1996.
Mr. STUPAK. Okay. You indicate that after the untitled letter,
and it wasnt done in this case, but in other cases thats been done,
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and then theres a warning letter. And then if necessary, you can
spend time to review the application; is that correct?
Mr. CRAWFORD. That is correct.
Mr. STUPAK. Have you ever done that? Not you, but FDA?
Mr. CRAWFORD. No. Thats never been done. I assume thats be-
cause they have gotten the correction they sought.
Mr. STUPAK. Well, itsIm just concerned, its a little bit like
studies, you know, the FDA asks for studies and if they dont get
the studies, they can always pull the drug from the market. And
one of the hearings we had here earlier this year, when I asked Ms.
Woodcock if thats ever been done, she said no. Im concerned that
the enforcement of the FDA in cases like this is always after the
fact, and then its not very vigorous, even when it is.
Im trying to find what parameters or what criteria would you
use where youd actually step in. I still am bemused by the fact
that the FDA is probably the only regulatory agency we have in the
Federal Government that doesnt have subpoena power to get the
studies that manufacturers do, but never submit to you, or if you
ask for further raw data in support of the study submitted, you
dont get it, in Serzone and a couple of other drugs that I know of.
So Im a little suspicious, or I shouldnt say suspicious, but really
dont believe the FDA does much in light of enforcement in these
areas. So Im trying to find out what criteria would you use before
you begin some type of enforcement, other than they didnt follow
through on the cease and desist order.
Mr. CRAWFORD. Yes. What I described is a chain of events where
we would be seeking correction of a firms course and if we didnt
get that, then we would go as far as we needed to go in order to
try to get the correction. Firms generally willyou know, acquiesce
to what FDAs requests are at some point. Sometimes it takes quite
a bit of coercion.
Mr. STUPAK. Sure. I realize youre fairly new to the FDA, and I
think youre saying last night youve been there three or four times,
and then out of the FDA, right?
Mr. CRAWFORD. Right. Yes, sir.
Mr. STUPAK. Do you believe the FDA should have subpoena
power to be able to obtain studies and raw data from these drug
manufacturers if theres a question as to the validity of a study?
Mr. CRAWFORD. Let me check if weve asked for that. We appar-
ently have not sought that, at least recently. And one of the rea-
sons is that we do have authority to require this information. And
if they do not submit the information, then we can suspend the re-
view of the product. And if it is a product thats already on the
market, we can suspend the marketing of that product.
Mr. STUPAK. Sure. But the FDA has never done it. Thats my
point. Counsels wrinkling their nose back there. If you know of
some drug, you have actually pulled it because of that, Id really
like to know because they didnt submit it. Take Serzone, take
Accutane. I can go down a couple of more if you want.
Mr. CRAWFORD. What well do is do a review of that and submit
for the record if we ever have and then if we have, which ones we
have.
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Mr. STUPAK. Sure. Id like to see that. I think the answer is no,
but if you have any. Mr. Chairman with that Id yield back. Thank
you.
[The following was received for the record:]
CBER has revoked approved license applications when it subsequently discovered
that the original applications contained false or misleading information. For exam-
ple, the establishment and product licenses issued to Sclavo, S.p.A. (U.S. license
0238), were revoked after an inspection identified significant differences between
the manufacturing methods used to manufacture product and those described in the
license application. The product licenses revoked included Diphtheria and Tetanus
Toxoids and Pertussis Vaccine Adsorbed, Tuberculin Purified Protein Derivative and
Cholera Vaccine. See 58 Fed. Reg. 66,380 (December 20, 1993). CBER has also ac-
cepted the withdrawal of pending applications once substantive review has been de-
ferred due to the presence of untrue statements in the application. For example,
CBER accepted the withdrawal of pending license applications for two monoclonal
antibody products.
FDA has repeatedly taken action to withdraw approval of new drug applications
(NDAs), abbreviated applications (ANDAs), abbreviated antibiotic drug applications
(AADAs), and new animal drug applications (NADAs) where sponsors failed to pro-
vide complete and truthful information to the Agency before or after marketing ap-
proval. In 1976, FDA initiated an action to withdraw approval of NDA 17-581 for
Naprosyn (naproxen) Tablets on the ground that the sponsor had misstated or omit-
ted material facts from the application. Specifically, FDA found that, because of
such misstatements and omissions, a study report submitted as part of the NDA
was uninterpretable in documenting the lack of chronic toxic effects or carcinogenic
potential of the drug. FDA found that the untrue statements vitiate[d] the earlier
conclusions reached by the Agency regarding long term safety of Naprosyn. See
FDA, Naprosyn Tablets: Opportunity for Hearing on Proposal To Withdraw Ap-
proval of New Drug Application, 41 Fed. Reg. 45,605 (October 15, 1976). Between
1989 and 1995, FDA initiated proceedings to withdraw approval of certain and
AADAs after it discovered untrue statements in batch and stability test records and
bioequivalence studies (see Enclosure B). FDA has also initiated proceedings to
withdraw approval of many NDAs, AADAs, ANDAs, and NADAs on the ground that
the sponsor had failed to submit required annual reports or periodic reports as re-
quired by FDA regulations. See 58 Fed. Reg. 25,653 (April 27, 1993) (3 NADAs); 58
Fed. Reg. 33,445 (June 17, 1993) (one NADA); 58 Fed. Reg. 34,814 (June 29, 1993)
(24 NADAs); 61 Fed. Reg. 9,999 (March 12, 1996) (41 NDAs); 61 Fed. Reg. 10,768
(March 15, 1996) (3 AADAs, 14 ANDAs); 61 Fed. Reg. 59,100 (November 20, 1996)
(1 NADA); 62 Fed. Reg. 37,063 (July 10, 1997) (4 NDAs); 63 Fed. Reg. 29,233 (May
28, 1998) (2 NADAs); and 65 Fed. Reg. 16,397 (March 28, 2000) (158 ANDAs).
ENCLOSURE B
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246
mg, 500 mg, and 1,000 mg Tablets; ANDA 71-684; Meclofenamate 100 mg Capsules;
ANDA 71-710; Meclofenamate 50 mg Capsules; ANDA 70-642; Diazepam 2 mg;
ANDA 70-643; Diazepam 5 mg; ANDA 70-644; Diazepam 10 mg; ANDA 70-421;
Verapamil Hydrochloride Tablets, 80 mg; ANDA 70-422; Verapamil Hydrochloride
Tablets, 120 mg; ANDA 71-020; Disopyramide Phosphate Capsules, 100 mg; ANDA
71-021; Disopyramide Phosphate Capsules, 150 mg; ANDA 71-558; Perphenazine
and Amitriptyline HCI Tablets, 4 mg/50 mg; ANDA 71-661; Oxazepam Capsules, 10
mg; ANDA 71-662; Oxazepam Capsules, 15 mg; ANDA 71-663; Oxazepam Capsules,
30 mg; ANDA 89-700; Perphenazine Tablets, 8 mg; ANDA 70-400; Meclofenamate
sodium 50 mg capsules; ANDA 70-401; Meclofenamate sodium 100 mg capsules;
ANDA 88-711; Phenytoin sodium extended release capsules 100 mg; ANDA 62-392;
Doxycycline hyclate tablets 100 mg; ANDA 88-207; Ergoloid mesylates tablets 1.0
mg; ANDA 70-727; Lorazepam Tablets, 0.5 milligram (mg); ANDA 70-728;
Lorazepam Tablets, 1 mg; ANDA 70-729; Lorazepam Tablets, 2 mg; ANDA 70-881;
Clonidine Hydrochloride Tablets, 0.1 mg; ANDA 70-882; Clonidine Hydrochloride
Tablets, 0.2 mg; ANDA 70-883; Clonidine Hydrochloride Tablets, 0.3 mg; ANDA 89-
387; Prednisone Tablets, 5 mg; ANDA 89-388; Prednisone Tablets, 10 mg; ANDA 89-
389; Prednisone Tablets, 20 mg; ANDA 62-047; Erythromycin ethylsuccinate oral
suspension, 200 and 400 mg; ANDA 71-929; Disopyramide phosphate extended re-
lease capsules, 100 mg; AADA 86-538; Nitroglycerin extended release capsules, 2.5
mg.
See 54 Fed. Reg. 35,535 (August 29, 1989); 54 Fed. Reg. 40,740 (October 3, 1989);
54 Fed. Reg. 42,367 (October 16, 1989); 54 Fed. Reg. 48,026 (November 20, 1989);
55 Fed. Reg. 8,995; 55 Fed. Reg. 9,360 (March 13, 1990); 55 Fed. Reg. 21,103 (May
22, 1990); 55 Fed. Reg. 25,712 (June 22, 1990); 55 Fed. Reg. 46,245 (November 2,
1990); 55 Fed. Reg. 47,542 (November 14, 1990); 55 Fed. Reg. 47,919 (November 16,
1990); 56 Fed. Reg. 2,528 (January 23, 1991); 60 Fed. Reg. 32,982 (June 26, 1995).
Mr. GREENWOOD. The Chair thanks the gentleman. One final
question and then were going to break. Mr. Whitfield did you have
questions?
Mr. WHITFIELD. Mr. Chairman, I just have one brief question. I
was just curious. Of the applications that are submitted for acceler-
ated approval or fast track designation, what percent of those meet
the criteria would you say for fast track?
Mr. CRAWFORD. We will check that and provide it for the record.
We believe it to be 60 to 80 percent of requests.
[The following was received for the record:]
Fast track programs are designed to facilitate the development and expedite the
review of new drugs that intended to treat serious or life-threatening conditions and
demonstrate the potential to address unmet medical needs. Fast track emphasizes
the critical nature of close early communication between FDA and sponsors. Proce-
dures such as pre-Investigational New Drug (IND) and end of Phase 1 meetings are
methods used to improve the efficiency of pre-clinical and clinical development. The
fast-track process focuses on efforts by FDA and sponsors to reach early agreement
on the design of the major clinical efficacy studies that will be needed to support
approval. Fast track policies are primarily designed to expedite drug development
during the IND stage. Approval under subpart H (accelerated approval) (Title 21,
Code of Federal Regulations Part 314, Subpart H) allows for marketing approval of
an NDA based on an effect on a surrogate endpoint along with well-controlled post-
marketing studies. A drug developed under fast track may also qualify for acceler-
ated approval.
CDER has received 172 requests for fast track designation since it was imple-
mented in 1998. One hundred seventeen fast-track designations were granted.
Forty-three fast-track designations were denied. Twelve fast-track designations are
still pending, Based on these statistics, 73 percent met the criteria for fast-track
designation.
Since 1978, CBER has granted 51 requests for fast-track designation and has de-
nied 38 requests. Two applications are still pending. Based on these statistics, 56
percent met the criteria for fast-track designation.
Mr. WHITFIELD. Okay. Mr. Chairman thats all that I wanted to
ask. Thank you for being with us today, Dr. Crawford.
Mr. CRAWFORD. Thank you very much.
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down. Now push the button again. Try it again. It still isnt on. All
right. Well get somebody to help you there.
Mr. GOLDHAMMER. Oh, wrong button.
Mr. GREENWOOD. Do whatever Dr. Waksal does. He has been
here before.
If you would identify your counsel.
Mr. GOLDHAMMER. Yes. Charles Cobb.
Mr. GREENWOOD. Very well. Mr. Cobb, good to have you with us.
Mr. Kopperl, are you advised by counsel as well?
Mr. KOPPERL. Yes, sir. Its Mr. Cobb.
Mr. GREENWOOD. Oh, same person. And Dr. Mendelsohn.
Mr. MENDELSOHN. Same person.
Mr. GREENWOOD. Dr. Waksal.
Dr. WAKSAL. Chip Lowenson.
Mr. GREENWOOD. Chip, would you identify yourself. Okay. Very
good.
Mr. Landes.
Mr. LANDES. Yes. David Meister.
Mr. GREENWOOD. Who is there. Okay. And Ms. Vaczy.
Ms. VACZY. Eric Heikel.
Mr. GREENWOOD. Who is there. Very well.
In that case, if you would stand and raise your right hand, Ill
administer the oath.
[Witnesses sworn.]
Mr. GREENWOOD. You are under oath, and we willOkay. Mr.
Goldhammer, do you have an opening statement that youd like to
make?
Mr. GOLDHAMMER. I do, sir.
Mr. GREENWOOD. Okay. Then please do. Youre recognized for 5
minutes, and, again, if you wouldif you can adjust that micro-
phone so it is right where you want it.
TESTIMONY OF ROBERT F. GOLDHAMMER, CHAIRMAN OF THE
BOARD, IMCLONE SYSTEMS, INC.; PAUL B. KOPPERL, MEM-
BER OF THE BOARD OF DIRECTORS, IMCLONE SYSTEMS,
INC., JOHN MENDELSOHN, MEMBER OF THE BOARD OF DI-
RECTORS, IMCLONE SYSTEMS, INC.; AND HARLAN WAKSAL,
CHIEF EXECUTIVE OFFICER, IMCLONE SYSTEMS, INC., AC-
COMPANIED BY JOHN LANDES, SENIOR VICE PRESIDENT,
LEGAL, IMCLONE SYSTEMS, INC., AND CATHERINE VACZY,
VICE PRESIDENT, LEGAL, IMCLONE SYSTEMS, INC.
Mr. GOLDHAMMER. Thank you. Mr. Chairman and members of
the subcommittee, good afternoon. My name is Robert
Goldhammer. I joined ImClone Systems board of directors in Octo-
ber 1984, and Ive been chairman since February 1991. Over the
past 18 years, Ive been privileged to witness the dramatic growth
of a small startup company to the viable company ImClone rep-
resents today. The company was founded by Dr. Samuel Waksal
and his brother Dr. Harlan Waksal in the early 1980s.
For the first 5 years the company sought to find its niche in es-
tablishing an appropriate scientific and business model for the com-
pany. To build ImClone, the Waksals assembled a distinguished
scientific advisory board, and with the help of that board, the com-
pany began to focus on the treatment of cancers. In 1991, the com-
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Over the past eighteen years, I have been privileged to witness the dramatic
growth of a small start-up to the viable company ImClone represents today.
The Company was founded by Dr. Samuel Waksal and his brother, Dr. Harlan
Waksal, in the early 1980s. For the first five years, the Company sought to find its
niche in establishing an appropriate scientific and business model.
To build the Company, the Waksals assembled a distinguished Scientific Advisory
Board, and with the help of that board, the Company began to focus on the treat-
ment of cancer. In 1991, the Company went to the public market on the basis of
its potential as a young, innovative scientific biotechnology company with great
promise.
A little more than a year ago, the Company stood on the verge of a breakthrough.
It had negotiated a strategic alliance with Bristol-Myers Squibb Company that
would facilitate its ability to bring hope in the form of Erbitux to hundreds of thou-
sands of cancer patients. And it was in the process of seeking approval of Erbitux
from the FDA.
While the Subcommittees primary interest is in that approval process, no doubt
some of your questions today will center around ImClones former President and
CEO, Sam Waksal.
Let me say two things about this subject. First, despite the misconduct that has
come to light, Sam Waksal was indispensable to this Company and an integral part
of its success over the years. Sam Waksal was the one who recognized the potential
of Erbitux, and it was he who was instrumental in building ImClone and in creating
significant value for its shareholders and patients over the long term.
Second, as soon as allegations of wrongdoing by Sam Waksal began to surface in
early 2002, the Companys Board acted quickly to address these issues. We put a
process in place to have its outside legal counsel investigate the allegations of mis-
conduct and report back to it. We debated the issues surrounding Sam Waksal vig-
orously, and decided to act after, not before, a thorough investigation had taken
place.
Today, despite the challenges of these recent months, ImClone remains a vibrant
company that is working with its partners to give people hope and save lives. We
continue to believe that Erbitux will become an important treatment for cancer pa-
tients, and the Company has an exciting pipeline of other products showing signifi-
cant promise.
This Board has met literally dozens of times this year in an effort to make sure
that we and the Companys management team are doing all we can and should be
doing to get through these difficult times.
Paul Kopperl, Chairman of ImClones Audit Committee, will discuss some of the
significant corporate governance changes the Board initiated over the past nine
months. Importantly, shortly after receiving the refusal-to-file letter from the FDA
at the end of 2001, we quickly formed a committee of outside directors and retained
separate legal counsel to address the serious issues facing the Company.
Above all, we have not allowed all of the controversy surrounding Sam Waksal
to deflect focus from our mission to get Erbitux back on track. Dr. John Mendelsohn,
a fellow Board member and a co-inventor of Erbitux, will speak to you in more de-
tail concerning this important drug.
Thank you for the opportunity to be here today. I will be pleased to answer any
questions you may have for me.
Mr. GREENWOOD. We thank you, Mr. Goldhammer.
Mr. Kopperl, do you have an opening statement?
Mr. KOPPERL. I do, sir.
Mr. GREENWOOD. Please proceed.
TESTIMONY OF PAUL B. KOPPERL
Mr. KOPPERL. Good afternoon. My name is Paul Kopperl. I chair
the audit committee of ImClone Systems board of directors. On a
personal note, Mr. Chairman, Id like you and the committee to be
aware that I have had my own personal battle with cancer, which
is why I regard the success of Erbitux and the company as a criti-
cally important mission.
Since joining ImClones board in December 1993, I have sought
to ensure that the company has had sound corporate governance,
policies in place and functioning. Over the years, we have reevalu-
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mains to guide ImClone into the future and ensure that we con-
tinue to fulfill our duties to the companys shareholders, to the pa-
tients afflicted by this dread disease and to the public. And I thank
you for this opportunity.
[The prepared statement of Paul B. Kopperl follows:]
PREPARED STATEMENT OF PAUL B. KOPPERL, CHAIR, AUDIT COMMITTEE, IMCLONE
SYSTEMS, INC.
Good afternoon. My name is Paul Kopperl. I chair the Audit Committee of
ImClone Systems Board of Directors. I also wish to mention, Mr. Chairman, that
I have had my own personal battle with cancerwhich is why I regard the success
of Erbitux and the Company as a personal mission.
Since joining ImClones Board in December 1993, I have sought to ensure that the
Company had sound corporate governance policies in place and functioning. Over
the years, we have reevaluated these policies so that they remained current best
practices.
Let me mention some recent examples: In the Fall of 2001, the Audit Committee
reviewed the composition of the Boards Executive Committee and recommended
that it be comprised of a majority of outside directors. Accordingly, in November
2001, the Board added two additional outside directors to the Executive Committee.
In addition, during this year, the Board has rigorously reviewed many of its pre-
vious corporate governance policies and implemented new ones where we thought
improvements could be made. Although I do not have sufficient time to describe
them all in detail to you now, I would like to present with you a brief overview of
the significant steps the Board has taken to improve corporate governance at
ImClone.
In April of this year, the Board adopted new enhancements to its securities laws
compliance and insider trading policies. As a result, the Company now has 16 offi-
cers who must file reports of their transactions under section 16 of the Securities
and Exchange Act. The Board has also put in place a strict process to be followed
before the Company may enter into any related-party transaction. And in an abun-
dance of caution, and to avoid even any appearance of impropriety, we terminated
the consulting agreements between the Company and the three scientific members
of the Board of Directors.
But we didnt stop there. The Company recently hired a highly qualified full-time
Vice-President to perform an internal audit function reporting to the Audit Com-
mittee. Finally, the full Board will soon be acting on a recommendation by one of
the Board committees to adopt a code of conduct for the Board, a code of conduct
for officers and employees, and specific charters for those Board committees that do
not currently have them.
As Mr. Goldhammer explained, when the Board learned of allegations of wrong-
doing by the Companys then-CEO, Sam Waksal, the Board took them seriously and
took appropriate action. After a deliberate and thorough process, including inves-
tigations by outside counsel, and a careful weighing of the relevant facts, as we
knew them, the Board concluded in May 2002 that it was in the best interest of
the Company for Sam Waksal to step down. On May 22, 2002, he resigned. In Au-
gust, the Company filed a lawsuit against him to recover the money paid him in
his separation agreement because we believe he breached that agreement by failing
to cooperate with federal investigations into his conduct. In this regard, it bears
mention that no Company policyhowever strongcan prevent an officer or other
employee from engaging in personal wrongdoing if that person chooses to evade
company rules and engage in wrongful, and perhaps illegal behavior.
In closing, let me say that this Board has faith in Erbitux and faith in ImClone.
We are bullish on the company, which is why each of us continues to serve and
maintain substantial holdings in its stock.
The goal of this Board has been and remains to guide ImClone into the future
and ensure that we continue to fulfill our duties to the Companys shareholders, to
the patients afflicted by this dread disease, and to the public. Thank you.
Mr. GREENWOOD. We thank you, Mr. Kopperl.
And let me add, if I may, that it is because this committee is so
intent on seeing that Erbitux, if it does have the potential that
many believe it does, is approved and that we have an expeditious
means of getting all innovative cancer products approved so that
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they can get to the patients, that is our objective. That is our goal,
and thats what this is all about.
Thank you, sir.
Dr. Mendelsohn, youre recognized for your opening statement.
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ducted strongly suggests that Erbitux is an active anti-cancer agent in end stage
colon cancer.
As the Subcommittee may know, the vast majority of patients diagnosed with
colorectal cancer are resistant to chemotherapy. Our laboratory research shows that
Erbitux, when used in combination with other agents, represents a promising treat-
ment to help overcome this resistance in order to shrink tumors, and perhaps ex-
tend life. The 9923 study was specifically designed to test this important hypothesis.
The accelerated approval process, which Congress enacted, was designed to make
certain that drugs which address an unmet medical need in a devastating disease
can become available to patients more rapidly based on the results of a Phase II
study. The question posed in a Phase II trial is whether a new drug is worthy of
further development. The Erbitux Phase II trials had positive results.
I am disappointed that Erbitux will not be available for patients who need it as
soon as we had originally hoped. I joined and continue to work with ImClone be-
cause I believe its scientists have the vision, the desire and the capability to get
this new treatment to patients. My personal goal remains to do everything in my
power to bring Erbitux through the approval process and to patients with cancer.
Thank you.
Mr. GREENWOOD. Thank you. And, again, we wish you success
with them.
Dr. Waksal.
TESTIMONY OF HARLAN WAKSAL
Mr. WAKSAL. Mr. Chairman, and members of the subcommittee,
I am Harlan Waksal. I am the chief executive officer and president
of ImClone Systems. I became the CEO of ImClone just over a hun-
dred days ago. This has been a challenging time for the company,
and Ive worked hard, everyone, everyone at the company has
worked hard to keep focused on the most important objective,
bringing to market a promising new anticancer drug, Erbitux.
Independent clinical studies performed at the Nations finest
medical institutions demonstrated that Erbitux holds promise for
treating patients with advanced cancer.
Shortly after I became CEO, ImClones cofounder, my brother
Sam, was arrested and charged with a number of offenses. Our
company is fully cooperating with investigations being conducted
by a variety of investigative bodies and agencies. Yet even as we
deal with these challenges, weve turned a new page. I am here to
report today that we have made progress on a number of fronts.
So let me review briefly our efforts on three vital areas: Corporate
governance, management reform and clinical testing.
First corporate governance. ImClone has put in place procedures
that comply with the recently enacted Sarbanes-Oxley law. We put
in place new measures that will strengthen further our existing in-
ternal controls. We have, No. 1, enacted a new rigorous insider
trading policy. No. 2, greatly increased the number of officers who
are required to file reports about their securities trading. And No.
3, ended all consulting arrangements with directors.
In short, we are moving forward in a way that should rebuild the
confidence of investors, regulators, the oncology community and the
public.
Second, management reform. While I take pride in our companys
achievements in its early years, we have made some changes in the
past hundred days to reflect our companys new direction. Although
the legal staff has served us well in the past, even before I became
CEO, we set in motion the strengthening of the Office of the Gen-
eral Counsel. I am working closely with our new chief legal counsel
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Second, management reform. While I take pride in our companys achievements
in its early years, we have made some changes in the past 100 days to reflect our
companys new direction. Although the legal staff has served us well in the past,
even before I became CEO we set in motion the strengthening of the Office of the
General Counsel. I am working closely with our new chief legal counsel as we adapt
our controls as the company grows.
We have also created a new positionVice President for Internal Audit. We re-
cently hired a highly qualified individual to serve in this important role. In addition,
we have added experience and depth to our regulatory and clinical affairs depart-
ments. We are also working closer than ever with our experienced partners at Bris-
tol-Myers Squibb and Merck KGAA to gain the benefit of their expertise and re-
sources.
Third, clinical testing. Erbitux is currently being tested in several clinical trials
around the country and around the world. Based on the regulatory approach that
we developed with our partners and continue to discuss with the FDA, we are mov-
ing forward with our clinical development program for Erbitux. In connection with
this program, we plan to treat several thousand patients in various clinical trials
of Erbitux in a number of different cancer types.
And finally, as part of our colorectal clinical development program, we will be re-
initiating a compassionate use program for colorectal cancer patients who do not
qualify for the clinical trials. The broad scope of our clinical development plans con-
firms our success in manufacturing Erbitux for use in clinical trials, our commit-
ment to cancer patients, and our beliefand our partners beliefin this drug. And
beyond Erbitux, we have a number of other drugs in our development pipeline.
ImClones immediate mission is clear: to gain regulatory approval for, and bring
to market, a promising cancer drug, Erbitux. Our company is working hard to put
the controversies of the past behind us, and to focus our time, energy, and resources
on the task at hand: helping patients who otherwise have little hope.
Mr. GREENWOOD. Thank you, Dr. Waksal.
Mr. Landes.
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This tremendous growth offered a whole host of difficult challenges that were as
basic as where to put all of these people and as complex as how to adapt our poli-
cies, procedures and controls to this ever changing landscape.
In addressing these challenges, I was heartened by the importance of our task
and the competence, dedication and determination of my peers. I think that, on a
whole, we have succeeded very well.
We constantly review all of our policies to try to ensure they are as effective and
efficient as possible. We consult with outside counsel and other advisors and we be-
long to trade associations and attend conferences to stay abreast of changing rules
and trends. We do this not because we have failed in the past but because we want
to be even better in everything we do.
Regarding trading in company securities by officers and employees, we believe we
have always had in place an appropriate insider trading policy. Throughout my time
with the company, we repeatedly reviewed our insider trading policy with outside
counsel at preeminent law firms advising us, and we were always assured that the
policy was appropriate. We also repeatedly considered whether the number of our
officers who filed reports of their ImClone stock transactions with the SEC was ap-
propriate, and we repeatedly reviewed that question explicitly with our outside
counselagain, preeminent in this field, and we were always assured in no uncer-
tain terms that the determination was appropriate.
To conclude, I think it is important that everyone remember that ImClone is a
real company, with real people working to achieve real results. I am proud to be
a part of this effort.
Thank you.
Mr. GREENWOOD. Thank you, Ms. Vaczy.
And the Chair recognizes himself for 10 minutes for questioning,
and Ill start with you, Ms. Vaczy. You might want to bend that
microphone and pull it over a little closer.
Before I do that, I would ask unanimous consent to place the doc-
ument binder into the record. And without objection, it shall be
done.
Ms. Vaczy, Id like to ask you about an issuers letter requested
by the Bank of America in January 2002 for warrants owned by
Sam Waksal. First, so Im clear, an issuers letter is a request to
a company to, in effect, certify that a person owns certain financial
instruments in the company such as in this case warrants. Is that
correct? Is that your understanding?
Ms. VACZY. Yes. It is a representation of the company, yes.
Mr. GREENWOOD. Okay. In January of this year, can you tell me
why Bank of America came to you for an issuers letter related to
Sam Waksal?
Ms. VACZY. Youre referring to one that they requested from me
as opposed to one that Ia copy of one that I received from them?
Could I perhaps see the one that were discussing?
Mr. GREENWOOD. Its Tab 26 in your binder there.
Ms. VACZY. Well, this doesnt appear to be an issuers letter in
Tab 26. It is a letter to Dr. Waksal, Sam Waksal and Dr. Harlan
Waksal.
Im familiar with an issuers letter. This does not appear
Mr. GREENWOOD. All right. Well try to correct that. But the
question iswell, let me ask you this. Did Bank of America this
January ask you for an issuers letter, or did you have discussion
with a bank about an issuers letter to certify that it had something
to do with Mr. Waksal?
Ms. VACZY. Yes. I did.
Mr. GREENWOOD. Why dont you tell us what that was.
Ms. VACZY. I had discussions with counsel to Bank of America
on Dr. Sam Waksals behalf around the middle of January 2002.
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achievements that Sam and Harlan had made in growing the com-
pany, which became increasingly complex as time went on, these
bonusessalaries and bonuses were reviewed in detail and were
considered to be acceptable.
Mr. DEUTSCH. Did you approve the deal to move up the vesting
of shares by Sam Waksal?
Mr. KOPPERL. Yes. The board of directors approved it, as did the
stockholders.
Mr. DEUTSCH. And that occurredwhen that occurred, so they
could purchase those stock options and tender them to Bristol? Was
that correct? Was that the purpose of it? Right. I mean, the loans
of over $100 million.
All right. What were the loans that were available, the loans that
were approved at that point, the corporate loans?
Mr. KOPPERL. Im sorry, Mr. Deutsch. Forgive me. Are we talking
about stock options or about loans?
Mr. DEUTSCH. Well, no. Lets talk about the loans.
Mr. KOPPERL. Okay. Thank you. In July, I think it was, of 2001.
Isnt that the
Mr. DEUTSCH. Thats correct.
Mr. KOPPERL. The board considered the possibility of making
loans to all the directors and decideddetermined that this would
notthat this would be an appropriate thing to do. We also consid-
ered the possibility of extending loans to employees and determined
that that would not bebecause of the confidentiality of negotia-
tions that were going on at the time, that that would not be an ap-
propriate thing to do.
Mr. DEUTSCH. Besides Harlan and Sam Waksal, was anyone else
allowed to borrow money from the company to acquire shares?
Mr. KOPPERL. The directors were, yes, sir.
Mr. DEUTSCH. Im sorry?
Mr. KOPPERL. The directors were.
Mr. GOLDHAMMER. Board of directors.
Mr. KOPPERL. The board of directors were given that opportunity.
Mr. DEUTSCH. Now, the board supported Sam Waksal in the sup-
port with Bristol last winterand again, I guess Ive gotten sort of
bits and pieces from the chairmans questioning. At that point you
did not know that he had forged loan documents? When Bristol ba-
sically had awanted to get rid of Sam last winter, were you
aware at that point in time that he had forged documents?
Mr. KOPPERL. I believe that the board was advised by ourIm
sorry. Let me start again. I believe that the special committee of
the board, which excluded Sam Waksal and Harlan Waksal, that
the board was apprised of a possibleI repeat, possible signature
forgery issue in early February, and I think that within a few days,
theywe tookwe took this seriously. We asked our counsel, our
outside counsel, to investigate thoroughly and to do so as quickly
as would be practicable and report back to the board.
A few days andI cant tell you exactly, but I would think within
a matter of a week or so, thewe received a letter from Peter
Dolan, the CEO of Bristol-Myers Squibb, making demands on
ImClone and proposing to renegotiate the agreements thatthe
agreements that existed between Bristol-Myers and ImClone.
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Mr. DEUTSCH. Were you aware that Sam Waksal was under in-
vestigation by the SEC for insider trading and was also under in-
vestigation by this committee at that time?
Mr. KOPPERL. I believe so.
Mr. DEUTSCH. So youobviously you supported his position in
terms of Bristols request. Why then and not now? I mean, now
youve changed that position. What happened? I mean, is he still
entitledyou know, he hasnt been proven guilty. ShouldntI
mean, should he still be leading the company today?
Mr. Goldhammer.
Mr. GOLDHAMMER. The counsel, the counsel sadly was taking a
long period of time to come up with this forgery question. At that
time, Sam was delivered a Wells Notice and that became
Mr. DEUTSCH. Im sorry. He delivered
Mr. GOLDHAMMER. I believe at that time, right at that time
Mr. DEUTSCH. The Wells letter?
Mr. GOLDHAMMER. Yes.
Mr. DEUTSCH. Yeah.
Mr. KOPPERL. May I add something to that, Mr. Deutsch?
Mr. DEUTSCH. Yes.
Mr. KOPPERL. The company adopted a thorough process to inves-
tigate the allegations against Sam Waksal as they arose. And this
was a continuing review in late January, February, March, April
and into May. And the Wells Notice that Sam Waksal received
from the SEC was theall along during that time, we decided on
balance for the good of the company and particularly the personnel,
that we would, if possible, like to retain Sams services. But the
Wells Notice was the final straw and in, I think it was May 22 or
21, we requested Sams resignation, and he resigned, I think, on
May 22.
Ms. DEGETTE. Will the gentleman yield?
Mr. DEUTSCH. My time has expired.
Ms. DEGETTE. Id ask unanimous consent that the gentleman be
given an additional minute so I can follow up on his question.
Mr. GREENWOOD. Without objection.
Ms. DEGETTE. All right. Will the gentleman yield?
Mr. DEUTSCH. I would be happy to.
Ms. DEGETTE. I guess I dont understand, Mr. Kopperl, why it
would take all those months for an outside counsel to investigate
what would seem to me to be a very simple issue of a forged
issuers letter.
Do you have any insight into that?
Mr. KOPPERL. Well, as I mentioned, maam, it was within a few
days after the special committee of the board received the informa-
tion about the alleged forgery that we were hit by the demand
not just a proposal, but a demand by Bristol-Myers Squibb to re-
negotiate the arrangements between the two companies. And that
took approximately 6 weeks to
Ms. DEGETTE. Okay. But you got a demand from Bristol-Myers
Squibb. But in the meantime, you have this forged signature right
in front of you.
Why would that take so long to investigate and take action? It
seems to me pretty clear-cut.
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a loan for $17 million, the promissory note for $17 million, also for
the exercise price for the stock options, correct?
Mr. GOLDHAMMER. Right.
Ms. DEGETTE. And
Mr. GOLDHAMMER. Thats the last one.
Ms. DEGETTE. Im sorry?
Mr. GOLDHAMMER. I had to go to another page. The answer to
that is yes.
Ms. DEGETTE. All right.
Now, there were three people who exercised stock options from
that transaction. The two Dr. Waksals and you, right?
Mr. GOLDHAMMER. Right.
Ms. DEGETTE. And there were only three people that exercised
stock options, right?
Mr. GOLDHAMMER. I think there were four.
Ms. DEGETTE. Four? Who was the fourth?
Mr. GOLDHAMMER. Oh, exercised options.
Mr. WAKSAL. There were many people who were exercising op-
tions.
Ms. DEGETTE. Im sorry. Who borrowed money?
Mr. WAKSAL. There was a fourth person who borrowed money, as
well, I believe.
Ms. DEGETTE. And who was that?
Mr. WAKSAL. Dr. Arnie Levine.
Ms. DEGETTE. Okay. But three of the four people who borrowed
money to exercise the options were the three members of the execu-
tive committee of the board of directors, werent they, Mr.
Goldhammer?
Mr. GOLDHAMMER. Yes, they were.
Ms. DEGETTE. Okay. Now, there was a great concern about some
of Dr. Sam Waksals spending habits throughout the period of
well, throughout the 1990s. Would that be fair to say?
Mr. GOLDHAMMER. I would say thats fair.
Ms. DEGETTE. And why would you say that Mr. Goldhammer?
Mr. GOLDHAMMER. Well, because in the beginning, as you say,
its a small company
Ms. DEGETTE. Uh-huh.
Mr. GOLDHAMMER. [continuing] started off with about 20 people.
Even through the middle of the 1980s, late 1980s, we only had 50
or 60 people; so it was a small company.
Ms. DEGETTE. Right. And youre worried about peoplethe board
is worried about peopleabout keeping costs under control, right?
Mr. GOLDHAMMER. Yes.
Ms. DEGETTE. If you could take a lookand, Mr. Kopperl, itll
probably be good for you to take a lookat Tab Number 5, which
is the minutes of the audit committee meeting held on February
12, 1998, which was several years ago. Take a look at that second
page.
I was particularly interested in Number 6 because, over the
years, Ive dealt with a lot of corporations; and Ive got to be hon-
est, Ive never seen a document like this where the audit committee
of the board of directors has got to tell the CEO that, for example,
they can only charge $50 to $100 of wine per bottle, or that they
cant buy sporting tickets except exceptional circumstances, or that
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And I just have one final kind of comment, and you can respond,
any of you, Mr. Goldhammer, if you want. Here you have a forgery
which Mr. Landes, a lawyer, says, well, its because he didnt un-
derstand a procedure. I never knew a standard procedure to be a
forgery.
In 1991, then you have a whole systematic taking out of money
and loans, abuse of credit card charges on the corporate credit card
for almost a 10-year period. Then you have another forgery. Then
you have insider trading around Christmas of last year, which I
havent even gotten to ask about. And it still takes the board al-
most 6 months to fire the guy, and hes only fired 2 weeks before
criminal charges are brought.
I amIm justIm stunned, and Ill yield back the balance of
my time.
Mr. GREENWOOD. The Chair thanks the gentlelady and recog-
nizes the gentleman from Kentucky for 10 minutes to inquire. And
before doing so, I would note that I believe there will be two votes
here, so at the end of Mr. Fletchers questioning, well probably re-
cess until 3:30.
Mr. FLETCHER. Thank you, Mr. Chairman.
My concernI wasnt here for all of the testimony. Ive certainly
read through and reviewed some of it. I wanted to address the con-
cerns Ive got about lookingduring this period of time particularly
when the studies were going on, there seemed to be a lot of pro-
motion going on about the effectiveness of Erbitux and what it was
going to do in the treatment of colon cancer particularly.
At the same time, we have this scientific advisory board and a
lot of publicity goes out of certainly the distinguished members of
that board. And let me ask, I knowDr. Mendelsohn, I believe, is
a member of that board. Is that correct?
Mr. MENDELSOHN. Yes, thats correct.
Mr. FLETCHER. And certainly you have a very distinguished
record as being, I guess in your testimony, President of and Pro-
fessor at the M.D. Anderson Cancer Center at the University of
Texas, so you probably have a lot of experience, if not personally,
at least from a management standpoint, of overseeing cancer trials,
protocols, I assume.
Are those done at M.D. Anderson cancer center?
Mr. MENDELSOHN. Yes, they are.
Mr. FLETCHER. Let me ask you, as a member of that scientific
advisory board from 1997 to 2001is that right?
Mr. MENDELSOHN. And earlier, yes.
Mr. FLETCHER. Okay. Who were some of the other members on
that board?
Mr. MENDELSOHN. Dr. Zvi Fuchs, Dr. Tom Deuel, Dr. Tom
Shenk, Dr. Arnold Levine and myself, and for a while, Dr. Fred
Sparling and Dr. Gerald Keusch, K-e-u-s-c-h.
Mr. FLETCHER. It would seem to be a very distinguished group
and people well known in the oncology and immunology commu-
nities; is that a fair assessment?
Mr. MENDELSOHN. Yes.
Mr. FLETCHER. Let me ask you why the advisory board was es-
tablished.
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The next day, on March 22, Sam Waksal reversed his decision
on asserting his privilege, and wished to testify before the SEC. Is
that your understanding of those facts, as I have set forth, correct?
Mr. MENDELSOHN. Yes.
Mr. GREENWOOD. And as a result, Sam Waksal remained CEO
of ImClone; is that correct?
Mr. MENDELSOHN. Yes.
Mr. GREENWOOD. One of ImClones directors, Richard Barth, dis-
sented from the boards actions and resigned from the board on
April 2, 2002, because he thought Sam Waksal should be replaced
as CEO; is that correct?
Mr. GOLDHAMMER. Yes.
Mr. MENDELSOHN. I dont know why he resigned. But he cer-
tainly was
Mr. GREENWOOD. Okay.
Mr. MENDELSOHN. [continuing] making that statement.
Mr. GREENWOOD. Perhaps you can turn to Tab 40 in your binder.
That is just his letter of resignation. It doesnt go to his motive.
Sam Waksals personal financial problems resulted in ImClone
issuing several promissory notes to extend loans to Dr. Waksal be-
cause of his use of corporate credit card for personal expenses. We
have gone over some of that. That is correct. Is that right?
Mr. MENDELSOHN. Yes.
Mr. GREENWOOD. Due to Sam Waksals history of irresponsibility
and using his corporate credit card, ImClone imposed special proce-
dures to review Sam Waksals expenses and determine what should
be reimbursed. We have already discussed that as well.
Mr. MENDELSOHN. Yes.
Mr. GREENWOOD. You agree with that? Given all of these prob-
lems that you knew about in April 2002, you still retained Sam
Waksal as CEO, and you gave him a bonus of $415,000, which, had
he been terminated as advocated by Richard Barth, ImClone would
not have been obligated to pay; is that correct?
Mr. GOLDHAMMER. That was a payment for 2001. It was paid in
2002, as this began to unravel.
Mr. GREENWOOD. But what
Mr. KOPPERL. Mr. Chairman, if I may. We had a contractual obli-
gation to pay Sam Waksal a bonus. I think the sum actually was
$450,000. But whatever it was. Prior to entering into the Bristol-
Myers Squibb transaction, Bristol insisted that employment con-
tracts be negotiated and put in place with Sam Waksal, Harlan
Waksal, and two or three others. And it was under that, the terms
of that agreement with Sam Waksal that the company was obli-
gated to pay.
Mr. GREENWOOD. And you feel that that obligation existed de-
spite his conduct? You didnt feel that he had breached his end of
the bargain?
Mr. KOPPERL. As of that time, our attorneys advised us that we
should make the payment.
Mr. GREENWOOD. All right. The April 15, 2002 issue of Fortune
reported that an investigative report showed that Sam Waksal
quote: Sam Waksal seems to have developed a pattern of forming
partnerships for real estate, restaurant, and small business ven-
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tures, and then borrowing money from these ventures and not pay-
ing it back.
Over the past 20 years, the report shows dozens of lawsuits and
tax liens have been filed against Waksal by the IRS, New York
State, American Express, banks, and brokers, arts galleries, con-
tractors, and individuals. And if you want evidence of that, you can
look at Tab 41. Did you see the article in April? And, were you
aware of these allegations before the article was published?
Mr. KOPPERL. I had better look, because I dont know.
Mr. GOLDHAMMER. Before theI mean, before this article was
published?
Mr. GREENWOOD. Right. Were you aware of any of this litany of
problems that the CEO of your company had for 20 years, where
he had dozens of lawsuits against him, tax liens filed by the IRS,
New York State, American Express, banks and brokers, art gal-
leries, contractors, and individuals. My question is, were you aware
that he had this long history of financial irregularity?
Mr. GOLDHAMMER. Yes. I was aware that he had a lot of prob-
lems with his personal finances. I didnt know about every specific.
Mr. GREENWOOD. Let me ask you this, Mr. Goldhammer. I have
constituents in my district, and we all do, who lost money on
ImClone, who bought ImClone stock because they believed it was
a promising company. They lost a lot of money. Now, your job obvi-
ously as a member of the board of directors, as chairman of the
board, was to protect them, to protect the value of their invest-
ment. And I am wondering howgiven what you have just said,
that you were aware that he had this long tortuous history of fi-
nancial mismanagement, how did you see that keeping him on in
his position as CEO of this company was consistent with your duty
to protect the investors in the company?
Mr. GOLDHAMMER. Well, first of all, we talk about these loans
that we gave him. We did not give him loans.
Mr. GREENWOOD. That is not what I am talking about in this.
Mr. GOLDHAMMER. Okay. Waksal, in the lastSam Waksal, in
the last, I would say 2 years or so, the last couple years
Mr. GREENWOOD. Turn your microphone toward you.
Mr. GOLDHAMMER. In the last 112, 2 years, that he seemed to be
out of his financial problems. He wasnt coming to me to try to get
loans to help him, you know, et cetera, et cetera. And I think it is
because he was borrowing a lot of money from banks. I am guess-
ing that. I dont know that. But I know hishe had a lot of securi-
ties, and I know he would probably have no hesitation in borrowing
money against it.
Mr. GREENWOOD. But did you have moments as a member of this
board where you thought to yourself, is this guy worthy of our trust
as the CEO of this company, given his lifestyle? Whatdid you
have times where you worried about whether or not this company
and its future and the fate of itsthe patients waiting for its prod-
uct, that he was the right guy for this job?
Mr. GOLDHAMMER. Yes, I have.
Mr. GREENWOOD. And did you share that? Was that an opinion,
as far as you know, that was held by other members of the board
of directors?
Mr. GOLDHAMMER. I just cant answer that.
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Mr. GREENWOOD. Have you ever had discussions with any other
board members where you guys would have a drink and say, I dont
know about this guy. He isreally seems to be
Mr. GOLDHAMMER. Not really.
Mr. GREENWOOD. No? Mr. Kopperl, Dr. Mendelsohn, either one
of you have such concerns?
Mr. KOPPERL. The board actively considered whether to continue
Dr. Sam Waksal as the CEO, beginning
Mr. GREENWOOD. When was that?
Mr. KOPPERL. Beginning in January.
Mr. GREENWOOD. Well, that was after all of this, after the insider
trading issue and so forth. But I am talking about in all of the
the litany goes on and on about financial irregularities with Sam
Waksal. And my question to you as a board member is, as you ob-
served this behavior, this conduct, did you have moments as Dr.
as Mr. Goldhammer did, when you wondered whether he washis
judgment was sound enough to run this company and protect its
investors?
Mr. KOPPERL. WeI speak for myselfregarded Sam Waksal as
the visionary who started the company, and in particular, enabled
Erbitux or C225 to be brought to ImClone and to develop that.
Mr. GREENWOOD. So he was the company.
Mr. KOPPERL. So he wasntif you mean was he the whole com-
pany? No, he wasnt. But
Mr. GREENWOOD. Not literally.
Mr. KOPPERL. Of course. But I mean, we figuredwe felt that
he
Mr. GREENWOOD. Was he indispensable?
Mr. KOPPERL. That he was largely indispensable. And that also,
because there were additional drugs in the pipeline.
Mr. GREENWOOD. Let me ask a final question. On September 27
of this year, an article from the Wall Street Journal entitled Four
Prestigious Labs Ousted Waksal for Questionable Work outlines a
number of allegations about improper research practices by Sam
Waksal at Stanford, the National Cancer Institute, Tufts, and Mt.
Sinai. And that article is in Tab 58 if you want to look at it. The
question to the board: Were you aware of any of these allegations
before the article was published?
Mr. KOPPERL. I was not, for one.
Mr. GOLDHAMMER. I was not.
Mr. GREENWOOD. Mr. Goldhammer says no. Dr. Mendelsohn?
Mr. MENDELSOHN. A similar story appeared in Vanity Fair dur-
ing the summer, which I read. So that was when I was first made
aware of it.
Mr. GREENWOOD. Did that cause you concern?
Mr. MENDELSOHN. Certainly.
Mr. GREENWOOD. Did you act upon those concerns?
Mr. MENDELSOHN. He was no longer running the company.
Mr. GREENWOOD. Okay. So it was
Mr. MENDELSOHN. This past summer.
Mr. GREENWOOD. It was this past summer?
Mr. MENDELSOHN. Right.
Mr. GREENWOOD. That was the first you learned of any of this?
Mr. MENDELSOHN. That is correct.
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Ms. DEGETTE. But there was nodo you have a written policy
as of the December 18 of the blackout policy? Because just now
today is the first I have ever heard of it as of that date.
Ms. VACZY. There was an e-mail on December 18 to members of
management.
Ms. DEGETTE. From you?
Ms. VACZY. Yes.
Ms. DEGETTE. And what did it say?
Ms. VACZY. I think I have seen it
Ms. DEGETTE. Do you have a copy of it?
Ms. VACZY. I may have seen it in your exhibits, I believe, if I am
not mistaken. But I dont recall.
Ms. DEGETTE. Mr. Chairman, if we can ask permission for Ms.
Vaczy to find that memo, I think that would be very helpful.
Mr. GREENWOOD. Perhaps have you found it? Tab 21. Try Tab
21.
Ms. VACZY. I may be mistaken.
Ms. DEGETTE. Yeah. Because we dont have
Ms. VACZY. But I can nonetheless speak to it.
Okay. I am advised I was shown it during my interview where
counsel is reminding me, and we are obtaining it now.
Ms. DEGETTE. Okay. We have not been produced any evidence of
a written blackout policy before December 21. So, Mr. Chairman,
if that is the case, I would ask this witness to produce that policy
for our committee.
Ms. VACZY. It has been suggested that I read the Bates ranges
of two documents in front of me. HCEC-30479, and 78. Well, no,
I am sorry, not 78. 79and HCEC-30496. And I think maybe I am
perhaps confusing you. On the 18th, an e-mail was sent to mem-
bers of management reminding them that they were required to get
preapproval of any transaction from the legal department under
the insider trading policy.
Ms. DEGETTE. So, in fact, you did not impose a blackout period
on the 18th; you imposed it on the 21st?
Ms. VACZY. Well, no. If I can
Ms. DEGETTE. Well, really, that is true. On the 18th, you said
if you want to sell your stock, you have got to get preapproval.
Ms. VACZY. Yes. But then we had, I think, perhaps three mem-
bers of management who contacted us and we said no.
Ms. DEGETTE. Oh. Who contacted you? And during what time pe-
riod?
Ms. VACZY. There were members of management on the 18th
who said would we be permitted to sell stock.
Ms. DEGETTE. Who was that?
Ms. VACZY. Let us see. I recall one gentleman, Gary Palter, who
is a member of our management.
Ms. DEGETTE. Was he aware of the FDA concerns?
Ms. VACZY. He was not
Ms. DEGETTE. As of the 18th?
Ms. VACZY. To my knowledge, no, he was not in the group of
members of management.
Ms. DEGETTE. He just happened to ask you could he sell his
stock?
Ms. VACZY. We would ask have to ask Gary, but I believe so.
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Let me get back to Dr. Sparlings letter. He said in his last para-
graph of his letter dated January 15, I know you are doing every-
thing possible to get the drug filed and approved, and we are hop-
ing this can be done as soon as possible for the sake of patients
who need the drug.
And I commend Dr. Sparling, because I think his focus was ap-
propriate.
The last sentence of his first paragraph in a letter dated Feb-
ruary 21, it says, I just do not believe I can be useful as a member
of the SAB, the scientific advisory board, and the long-term inac-
tivity of the SAB suggests the SAB is not useful to the company.
I will tell you, it has the appearance, the SAB, at least at this
pointmaybe early on, as Dr. Mendelsohn mentioned it was active,
butof being somewhat window dressing; and I dont know if there
was a tremendous enthusiasm.
But I want to get to one last question, and this
Mr. WAKSAL. If you dont mind, sir, if I can just address that. I
think your point is a very important one.
Did the company use appropriate experts to help us and help
guide us as we went forward? And I have to say, we did indeed.
Members of the scientific advisory board were helping us in
science, in basic research. The work we are doing clinically was
done with oncologists, experts in the field, who were helping us as
we went forward, and they had very different, distinct roles.
Mr. FLETCHER. And I understand that. I have been involved in
some clinical studies and know that following the protocol is crit-
ical. Otherwise everything else doesnt count, because it has no
credibility.
Dr. Waksal, let me ask you a question, and this is a different
one. I want to ask you about a particular disturbing story that ap-
peared in the press, which does make us question your motives in
the development of Erbitux.
At Tab 49 you might seeyou will see an article from the Atlan-
tic Constitution entitled Patients, a Low Priority for Drug Indus-
try Leaders. It tells the story of Ruth Ann Santino, 51, a mother
of two teenage sons and a woman fighting for her life against
colorectal cancer, the target of ImClones drug Erbitux.
At the advice of her doctor, she vigorously pursued Erbitux to the
exclusion of other possible therapies on a compassionate-use basis.
The CBS program 60 Minutes produced a piece on the availability
of Erbitux, and Mrs. Santino was interviewed for the story. The al-
legation of the piece, as we understand it, was that the distribution
of the drug to cancer patients was arbitrary and unfair.
I dont want to make any comment about the veracity of the alle-
gations in the 60 Minute piece, but I do want to ask you about
what you, Harlan Waksal, did in response to this program. Mrs.
Santinos husband, Fred Santino, says that after the 60 Minute
show aired and 2 days before Mrs. Santino died, you called the
Santino home, raising hopes that ImClone might throw a lifeline
to this woman and family in distress, but instead took to task Mr.
Santino, whose wife was dying next to him, for being unfair to
ImClone on 60 Minutes.
And to add insult to an unspeakable injury, you did not even ask
about Mrs. Santino or offer her the use of the drug.
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First, let me ask you, did you make that phone call?
Mr. WAKSAL. Yes, I did, but the call was not made to take issue
with Mr. Santino. In fact, my call was made in a response to the
fact that I wanted to correct some points on record. I wanted him
to know that, indeed, we were doing nothing to single out his fam-
ily, his wife or patients who could not get access to our drug, but
that there was not drug available under a compassionate-use pro-
gram.
I didnt offer out hope. I offered what I believed was compassion
and understanding that he was upset with the company, but I
wanted him to know that the company was doing what we felt was
right to get this drug approved and out there to patients like his
wife.
Mr. FLETCHER. Did you offer the drug Erbitux to her? Did you
have within the protocol of compassionate use, the power to offer
that drug Erbitux?
Mr. WAKSAL. One, I did not offer the drug.
And second, the compassionate-use program had been stopped in
January of that year. There was no compassionate-use program.
There was no drug being used in compassionate-use studies other
than patients already enrolled.
Mr. FLETCHER. Thank you. I think that concludes my ques-
tioning.
I appreciate all of you being here, and we will adjourn the meet-
ing.
[Whereupon, at 4:16 p.m., the subcommittee was adjourned.]
[Additional material submitted for the record follows:]
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